Matrix-backed Five Star Business Finance makes IPO debut
Mumbai, 21st November 2022: Matrix-backed Five Star Business Finance debuts on exchanges with an issue size of 33,512,901 shares, marking a momentous event in the company's remarkable growth journey.
Five Star Business Finance is an NBFC providing secured business loans to micro-entrepreneurs and self-employed individuals, each of whom is largely excluded by traditional financing institutions. Assets Under Management stood at Rs. 5,300 crore as of June 30, 2022, setting the industry benchmarks for profitability and asset quality. As of June 30, 2022, it has a network of 311 branches in 150 districts with a work force of 6,077 employees.
Matrix Partners India led Five Star's first institutional round in February 2014, and invested in subsequent rounds till 2017. This IPO is a big milestone in the journey of a special company, where Matrix exited part of its stake but continues to remain significantly invested in Five Star.
On the occasion of Five Star's IPO listing, D Lakshmipathy, Chairman and Managing Director of Five Star, spoke about the company's partnership with Matrix, and said: "It took 18 months for myself and Matrix to conclude the deal in 2014. I would say every minute of waiting was absolutely worth it. They are not just investors in Five Star, they have stayed the course with me through this journey and I am very grateful for the long association. I would like to specifically talk about the last 20 days. We were going through tough times. Even during these times, Matrix stood like a rock and helped us in a tremendous way. A very special relationship that I share with Vikram, Avnish and Team Matrix."
Rangarajan Krishnan, CEO, Five Star commented "Thank you Vikram and Matrix for all the support and guidance through the years. You pulled me into the Company in 2015, it is great to have seen close to a 50x growth since then. Thank you for staying with us through the thick and thin."
Srikanth G, Chief of Strategy & Finance, remarked "Matrix was one of the big factors in me taking the decision to join Five Star. It has been a great journey. They have been of immense support through this journey."
Vikram Vaidyanathan, MD, Matrix India said, "We have been immensely privileged and honoured to be Five Star's very first investor and to have been a part of their tremendous journey. We've learnt how great financial services businesses are built and run, by observing and learning from the outstanding team of Pathy sir, Ranga and Srikanth. They've maintained their unwavering focus on asset quality and profitability through every crisis '“ demonetization, Covid etc '“ and built an organizational culture to drive that focus. Personally, it has been one of the most rewarding experiences to partner with them and grow alongside them - it's journeys like Five Star that make you want to be a venture investor! We wish the company Godspeed on their IPO listing and for the next phase ahead!"
About Five Star Business Finance:
Five Star Business Finance is an NBFC providing secured business loans to micro-entrepreneurs and self-employed individuals, each of whom is largely excluded by traditional financing institutions. The company is headquartered in Chennai, Tamil Nadu with a strong presence in south India, and all of its loans are secured by their borrowers' property. Five Star Business Finance has developed a business model predicated on arriving at an appropriate risk framework, with the optimal installment-to-income ratio to ensure that their customers have the necessary means to repay the loan after meeting their regular obligations and other event-based capital requirements. The company primarily offers its customers small loans for business purposes.
The interest rates on their loans depend on the underlying tenor (which ranges from two to seven years), with approximately 95% of the loans sanctioned being between the interest rate range of 24% to 26% and between the tenure range of five to seven years. 100% of the company's customer leads are sourced in-house without any use of direct selling agents. All loans are fully secured with more than 95% of the collateral, at the time the loan application is approved.
About Matrix Partners India:
Founded in 2006, the firm invests in companies targeting the Indian consumer and enterprise market at the seed, early and early growth stages. Matrix India has invested in several market leading financial services companies, such as, Razorpay (payments and SME Neobank), OfBusiness (B2B Commerce, Fintech), Oxyzo (a tech-enabled smart financing solution provider) OneCard (mobile-first credit card), LiquiLoans (P2P lending), Jupiter (consumer neobank), Mswipe (mobile POS) and dezerv. (new-age expert investing platform).
Other marquee investments include Ola (mobility), Dailyhunt (mobile local language platform), Ola Electric (electric vehicles), Stanza Living (tech enabled student housing platform), DealShare (social commerce platform), MoEngage (SaaS), Country Delight (D2C dairy & fresh foods brand), Captain Fresh (seafood marketplace), GoKwik (e-commerce enablement platform), Bijnis (B2B platform for factories) and Zupee (leading skill-based gaming app) among others. Matrix India has advisory offices in Bangalore, Delhi and Mumbai. Matrix Partners has a global network of funds investing in the US, China and India, with approximately $5 billion under management. Further information is available at www.matrixpartners.in. To know more about our investment philosophy, check out the #MatrixMoments podcast series.