Five-Star Business Finance Limited IPO to Open on Nov 09: Check IPO Details, Issue Date, Price

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Five-Star Business Finance Limited IPO to Open on Nov 09: Check IPO Details, Issue Date, Price

November 07, 2022
Five-Star Business Finance Limited IPO to Open on Nov 09: Check IPO Details, Issue Date, Price

Five-Star Business Finance Limited is coming out with a fresh public issue to raise Rs. 1960 crores from the market.

Below are the details of the Five-Star Business Finance Limited IPO:

  • Issue opens – Nov 09 (Wednesday)
  • Issue closes – Nov 11 (Friday)
  • Issue size – Rs. 1960 crores
  • Price band – Rs. 450 to 474 per equity share
  • Bid lot – 31 shares and in multiples thereof

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And here are some details of the company and further details on the Five-Star Business Finance

Company details:

Five-Star Business Finance Limited is an NBFC-ND-SI providing secured business loans to micro-entrepreneurs and self-employed individuals, each of whom are largely excluded by traditional financing institutions. They are headquartered in Chennai, Tamil Nadu with a strong presence in south India and all of their loans are secured by their borrowers’ property, predominantly being SORP.

·    They have developed a business model that is predicated on arriving at an appropriate risk framework, with the optimal instalment to income ratio to ensure that their customers have the necessary means to repay the loan after meeting their regular obligations and other event-based capital requirements.

·    They primarily offer their customers small loans for business purposes, as well as loans for asset creation such as home renovation or improvement, or for meeting expenses for significant economic events such as marriage, healthcare and education, their growth is primarily volume led through increasing their customer base while keeping the ATS stable, and they expect this to continue. The interest rates on their loans depend on the underlying tenor (which ranges from two to seven years), with approximately 95% of the loans sanctioned being between the interest rate range of 24% to 26% and between the tenure range of five to seven years.

·    100% of their leads for customers are sourced in-house without any use of direct selling agents to source leads for them; further, all of their loans are fully secured with more than 95% of the collateral being SORP at the time the loan application is approved.  

·    They had an extensive network of 311 branches, as of June 30, 2022, spread across approximately 150 districts, eight states and one union territory, with Tamil Nadu, Andhra Pradesh, Telangana and Karnataka being their key states. Such key states collectively accounted for approximately 85% of their branch network by number, as of June 30, 2022.  

·    They also have a two layered underwriting architecture comprising a field credit team that is “on the ground” and closer to the customer (the “Field Credit Team”); and a file credit team that remotely reviews loan applications and undertakes credit decisioning (the “File Credit Team”). They have implemented a comprehensive and robust credit assessment, risk management and collections framework to identify, monitor and manage risks inherent in their line of business.

·    They secure financing from diversified sources of capital, including term loans; proceeds from loans securitized; proceeds from the issuance of NCDs; issuances of principal protected market linked debentures; and proceeds from loans assigned from banks, financial institutions, mutual funds, and other domestic and international development financial institutions, as applicable to meet their capital requirements.

Issue break-up:

  • QIB – 50% of the offer – Rs. 980 crores
  • NIB – 15% of the offer – Rs. 294 crores
  • RET – 35% of the offer – Rs. 686 crores

Listing: BSE and NSE

Registrar: KFin Technologies Limited

UPI: All Retail & NII bidders' (bids up to Rs 5,00,000) applications through brokers are compulsorily in UPI Mode

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