Five Star Business Finance make a dull market debut as stock lists at discount


Shares of Five Star Business Finance Ltd made a stock market debut on Monday with the stock listing at 464 apiece on the NSE, a discount of over 2% as compared to its IPO issue price of 474 per share. On the BSE, Five Star Business Finance shares started trading at 449 apiece.

The initial share sale was entirely an offer for sale (OFS) of shares to the tune of 1,960 crore by existing shareholders and promoter group entities. The price band for the issue was fixed in the range of 450 per share to 474 per share. The IPO closed with 70% subscription, lower than its actual issue size.

The non-banking financial company (NBFC) mobilised 588 crore from anchor investors ahead of its initial share sale that was open from November 9 to November 11, 2022. The firm decided to allocate 1.24 crore equity shares to anchor investors at 474 apiece.

SmallCap World Fund, Fidelity Investments, Capital Research, Malabar Investments, Government Pension Fund Global, Abu Dhabi Investment Authority, Norges Bank, Carmignac Gestion, White Oak, Bay Capital, Segantii, SBI Life Insurance, HDFC Mutual Fund (MF), Baroda BNP MF, Edelweiss MF and Mirae MF are among the anchor investors.

Five Star Business Finance provides secured business loans to micro-entrepreneurs and self-employed individuals, the two segments of borrowers largely excluded by traditional financing institutions.

The NBFC commenced operations in 1984 with a focus on consumer loans and vehicle finance. It changed its business approach in 2005 towards small business loan lending in urban, semi-urban markets and rural areas with growth potential. Asset Under Management (AUM) increased to 5,100 crore as of March 31, 2022, as compared to 4,400 crore a year earlier.

The company has network of 311 branches, as of June 30, 2022, spread across eight states and one union territory and approximately 150 districts across India, with Tamil Nadu, Andhra Pradesh, Telangana and Karnataka being the key states. The company is headquartered in Chennai, Tamil Nadu with a strong presence in south India. The Chennai-based NBFC is backed by investors like TPG, Matrix Partners, Norwest Ventures, Sequoia and KKR.

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