Five Star Business Finance IPO Subscribed 70% On Closing Day

The IPO was subscribed 70% as of 7 p.m. on Nov. 11

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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 Details

  • 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.

Subscription Status: Day 3

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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