Five-Star Business Finance Limited (FSBFL), as per its credit rating reports, is a non-deposit-taking NBFC, registered with RBI. FSBFL provides secured financing solutions to micro-entrepreneurs and self-employed individuals, predominantly in the semi-urban markets. It also lends small housing loans which are given for construction, takeover, home repairs, and improvements. The company also lends mortgage loans that are given to meet their personal needs. All these loans are collateralized and secured against the residential property of the customers and are given targeting the middle and lower middle-income segment in urban, semi-urban, and fast-growing rural geographies.

Five Star Business Finance provides Small business loans to meet borrower requirements for commencing new businesses, expansion of their existing businesses and settling any unorganized dues they have taken to further their businesses.

The loans are given based on Five Star Business Finance management’s evaluation of the borrower's household cashflows coupled with the security of the borrower’s house collateral.

The typical loan ticket of Five Star Business Finance ranges between Rs 1 lakh to Rs 10 lakhs for a tenure between 24 and 84 months. The repayments are to be made on a monthly equated basis.

Five Star Business Finance’s Geographical Presence

Five Star Business Finance has an extensive network of 268 branches as of September 30, 2021, spread across 8 states. Tamil Nadu, Andhra Pradesh, Telangana and Karnataka are our key states. Such key states collectively accounted for approximately 85% of branch networks by number.

Underwriting Model of Five-Star Business Finance

Five Star Business Finance has 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”). Five Star Business 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.

Financing sourced by Five Star Business Finance

Five Star Business Finance secures 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;
• proceeds from loans assigned from banks,
• financial institutions,
• mutual funds, and other domestic and international development financial institutions.

Industry Overview

The sector has been plagued with worsening asset quality, which has reached 17.5% in fiscal 2019 as compared to 7.2% in fiscal 2015. This has led to the gradual reduction of the share of industry credit in the overall banking sector. CRISIL Research expects the growth to stay low in this sector on account of the cautious approach taken by lenders.

Unaudited Financial results for the quarter ended 30th June, 2022

Particulars (in Crores)	Quarter Ended June2022	Quarter Ended June 2021	Year Ended 2022
	Unaudited	Unaudited	Audited
Net Revenue	337.97	302.46	1254.06
Operating Cost
Employee Benefit Expense	71.88	51.54	236.11
Other Expenses	12.59	28.29	102.99
Total Operating Cost	84.47	79.83	339.1
Operating Profit (EBITDA)	253.5	222.63	914.96
Other Income	1.08	0.24	2.1
Depreciation and Amortization Expense	3.61	2.6	12.24
Profit Before Interest and Taxes	250.97	220.27	904.82
Finance Costs	64.79	86.41	300.6
Profit Before Tax and Exceptional Items Before Tax	186.18	133.86	604.22
Exceptional Items Before Tax	0	0	0
Profit Before Tax	186.18	133.86	604.22
Income Tax	46.72	34.12	150.67
Profit for the Period	139.46	99.74	453.55
Earning per share(EPS)	4.79	3.73	16.09
Paid up Equity Capital	29.13	27.11	29.13
Reserves(excluding Revaluation Reserve)	3827.84	2916.33	3681.22
Securities Premium	2314.36	1907.05	2313.61
Net Worth	3856.97	2943.44	3710.35
Oustanding Debt	2520.31	3121.21	2558.83
Debt - Equity Ratio	0.65	1.06	0.69

Despite the pandemic, the Five Star Business Finance achieved the following milestones during the financial year ended March 31, 2021 - The borrower base crossed 1,75,000 during the year. Gross NPA of 1.02%, which is a good asset quality metric across the financial services industry, is lower than the 1.37% that the Five Star Business Finance had in March 2020. As at March 31, 2021, the total assets under management of Five Star Business Finance increased to Rs 4639.2 Cr in FY22 from Rs 4445.3 Cr in FY21, registering a growth of 4.36%. Profit before tax of Five Star Business Finance was at Rs 476.44 Cr in FY22 up by 36.40% over FY21 at Rs 349.30 crores. At Rs 358.99 Cr, Profit After Tax of Five Star Business Finance was higher by 37.05% over the previous year’s Rs 261.95 crores. The Five Star Business Finance was valued at 1.4 billion dollars, making it a coveted ‘Unicorn”.  with 2 new investors viz. KKR and TVS Capital, have chosen to invest in Five Star Business Finance.

Fundraise - Five Star Business Finance

Five Star Business Finance has raised over INR 1900 Cr (US$260mn) in equity and is backed by marquee private equities including TPG, Matrix, Norwest, Sequoia, KKR, and TVS Capital. In March 2021, Five Star Business Finance had raised INR 1,700 crore from new and existing investors at a valuation of INR 10,300 crore.

List of all fundraise done by Five Star Business Finance

IPO Updates of Five Star Business Finance

Nov 21: The Chennai-headquartered NBFC, Five Star Business Finance had filed its draft red herring prospectus (DRHP) in November 2021.

Jan, 22: Five Star Business Finance, has received approval from markets regulator SEBI to raise Rs 2,752 crore through an initial public offering (IPO).

The IPO is entirely an offer for sale. The company will not receive any proceeds from the offer.

OFS in IPO by existing investors of Five Star Business Finance

TPG Asia	INR 1350 Cr
Matrix Partners	INR 579 Cr
Norwest Venture	INR 385 Cr
Sequoia Capital India	INR 257 Cr
Promoters (Deenadayalan Rangasamy and Varalakshmi)	INR 181 Cr