Five Star Business Finance Limited is a public company incorporated in May 1984. It is classified as a Non-Govt company and operates as a Non-Banking Finance company, with a significant presence in south India. Over the last three decades, Five Star has been working as a specialised financial service company in addressing the needs of the Indian population, funding the people who are perceived to be unfundable. The company’s customers include small shop owners, flower vendors, maids, and masons to small and medium enterprises that form India’s economy’s backbone. The company is primarily engaged in providing small business loans for commencing new businesses, expanding their businesses, and loans for house renovations/extensions. The company has been growing immensely over the past few years, achieving a three-year CAGR of 105.6% in Net Worth. In terms of new branches, it has opened 79 branches increasing the network to 252 branches across India, increased employee base, on-boarding new borrower’s base, and overall portfolio growth.

Fund Raising:

Fresh Capital Infusion:

March 2020

During the financial year ended 31st March 2020, the company received a follow-on round of equity infusion amounting to INR 315 crores from TGP Capital, which had also invested INR 619 crores FY2019. Along with the internal accruals during financial year 19-20, the company has spruced up the net worth to INR 1,944 crores.

March 2021

During the financial year 20-21, the company has raised funds from a consortium of global and Indian investment firms. The round included investments by existing investors in the company led by Sequoia Capital India with Norwest Venture Partner’s participation and new investors led by KKR with TVS Capital’s involvement. The company received an equity infusion of INR 517 crores from the participants. Along with the internal accruals during the financial year 19-20, the company has increased the net worth to INR 2,462 crores.

The above two Equity Fundraising showcases have increased the confidence of the investors and commitment of the promoter for the business.

Debt Financing:

The company has managed to raise a good quantum of funds despite a stressed

scenario in India. The company ended FY2020 by raising INR 1,417 crores in debt, amounting to INR 2,372 crores in debt. The company also increased its lender base by about 9-10 new lenders such as responsiAbility, Northern Arc Capital which shows the confidence lenders have in the company.

The company also received debt through the NCD route of a large quantum of INR 125 crores from responsAbility, Switzerland, headquartered development finance organisation.

Despite the increase in Borrowings, the company has kept its leverage at a low level, standing at 1.21x, on robust internal accruals and the follow-on equity infusion.

Five Star looks to bridge the funding gap in the industry, which has about 60 million MSMEs, employs about 125 million people, and accounts for more than 30 percent of India’s GDP