Five Star Business Finance IPO Subscribed 70% On Closing Day

Small business lender Five Star Business Finance Ltd. launched its initial public offering on Wednesday to raise up to Rs 1,960 crore.

The IPO was subscribed 0.32 or 32% on day 2. The bidding was led by Institutional investors.

The issue is a complete offer for sale, with a handful of the company's early shareholders looking to sell their holdings.

The Chennai-headquartered lender deals in secured business loans to micro-entrepreneurs and self-employed individuals, each of whom are largely excluded by traditional financing institutions. As of June 30, loans to small business owners and self-employed borrowers accounted for 70.15% of gross term loans.

Borrowers earning more than Rs 25,000 per month accounted for just 0.58% of the total loans at the end of the first quarter, according to data available in the red herring prospectus.

• IPO open: Nov. 9.

• IPO close: Nov. 11.

• Price band: Rs 450-474 per share.

• Fresh Issue: Not applicable.

• Offer for sale: Rs 1,960 crore.

• Selling shareholders:  SCI Investments (Rs 166 crore), Matrix Partners (Rs 840 crore), Norwest Ventures (Rs 361.4 crore), TPG Asia (Rs 700 crore).

• Book running lead managers: ICICI Securities, Edelweiss Financial, Kotak Mahindra Capital, Nomura Financial Advisory.

The IPO was subscribed 0.7 times, or 70%, as of 7 p.m. on Nov. 11.

• Institutional investors: 1.77 times

• Non-institutional investors: 0.61 times

• Retail investors: 0.11 times

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