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Matrix Partners backed Five Star Business Finance raises INR 114 crore from Morgan Stanley

Bangalore, India June 29 2016: Five Star Business Finance Limited (“Five Star”), a niche NBFC that specializes in small ticket business and housing loans, announced today the successful closure of its equity fund raise of INR 114 crore from Morgan Stanley Private Equity Asia for a minority stake. The Company’s first institutional investor, Matrix Partners which invested into the Company in two earlier rounds (2014 and 2015), continues to remain a shareholder in the Company.

Five Star operates 67 branches across Tamil Nadu, Andhra Pradesh and Karnataka and serves over 9,000 customers. During the last one year, the Company has significantly expanded its branch network and has augmented its Board, management team and borrowing relationships. In December 2015, FMO, the bilateral private-sector development bank of Netherlands, subscribed to NCDs issued by the Company. Five Star also recently received a housing finance licence from the National Housing Bank.


D.Lakshmipathy, Chairman and Managing Director of Five Star remarked that, “It is a great pleasure to invite a global fund like Morgan Stanley Private Equity Asia to join us on our journey as we progress towards becoming a leading financial services player serving the under-banked”.


Arjun Saigal, Co-head of Morgan Stanley Private Equity Asia in India, said, “We are excited to be making this investment and look forward to participating in its next phase of growth. The term ‘five star’ refers to excellence and we believe that this is what this organization continuously strives to achieve. The financial services industry in India offers tremendous opportunity and this investment marks Morgan Stanley Private Equity Asia’s second investment in the space in India.”


Vikram Vaidyanathan, Managing Director at Matrix India added that “Five Star has almost doubled its number of branches in the last year and is poised for growth in both small business loans and housing loans. We believe Five Star addresses a very large demand gap with great unit economics. We are privileged to partner with Mr. Lakshmipathy and the management team at Five Star on their journey to creating a very large financial institution”.


About Five Star:

Five Star is a small ticket business and housing finance company that provides secured loans to MSME customers such as small shop owners (provision stores, small restaurants, textile stores, bakery outlets, medical stores etc), small & medium machine shop operators, self employed people etc. Five Star also provides loans for the purpose of home improvement to MSME customers. With a loan book of about INR 200 crore, Five Star has served more than 9,000 MSME customers and is present across 67 branches in Tamil Nadu, Andhra Pradesh and Karnataka. Five Star plans to further expand its footprint across different states in India. Further information is available at www.fivestarbcl.com


About Matrix Partners India:

Matrix Partners India is an investment firm with INR 4,500 crore under management. The firm invests in companies targeting the Indian consumer market at the seed, early and early growth stages. The firm has invested in several market leading companies in the consumer technology space including Ola (local transportation), Quikr (online classifieds), Practo (doctor search engine), Stayzila (short term accomodations marketplace), LimeRoad (mobile social commerce marketplace), Dailyhunt (mobile local language platform), Housejoy (local services marketplace) and Mswipe (mobile POS) among others. Matrix Partners has a global network of funds investing in the US, China and India with US $4 billion under management. Further information is available at www.matrixpartners.in

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