NBFC Five Star raises Rs 333 crore in Series C round of funding

Chennai-based Non-Banking Financial Company (NBFC) Five Star Business Finance Limited, specialised ticket business and housing loans, has raised fresh funds in its Series C round led by Norwest Venture Partners and Sequoia Capital.

The funding round in which Five Star raised Rs 318 crores through primary infusion with about Rs 15 crores via a secondary sale of shares, also saw participation from existing investors, comprising a fund managed by Morgan Stanley Private Equity Asia and Matrix Partners.

The fresh funds would be used to expand the loan portfolio and also to partly increase home loan activity of its housing subsidiary, the company said.

MSME (micro & small enterprise customers)-focused Five Star caters to customers such as small shop owners (provision stores, small restaurants, textile stores, etc), small & medium machine shop operators, self-employed people etc. Five Star also provides loans for the purpose of home improvement to those customers, specifically in the area of non-technology based B2C services

“Over the years, we have developed an expertise in assessing their cash flows and in underwriting their credit, while keeping the asset quality intact. (Our investors) coupled with our 15+ bank relationships, add tremendous strength to our balance sheet and growth plans, as we aim to emerge as a leading player in the small business and small housing loans segment,” said D Lakshmipathy, Chairman and MD, Five Star, reported ET.

With an average ticket size of Rs 3-4 lakhs, the company operates 110 branches across South India, and serves more than 18,000 customers, and hopes to double its loan book to ₹1,000 crore this financial year.

Last year, Five Star had raised Rs 114 crore from the Morgan Stanley Private Equity Asia-managed fund. In 2015 Matrix Partner had invested in the company and prior to that in 2014, it invested an undisclosed amount in the company for a minority stake.

Five Star: Website