[Funding alert] Chennai-based NBFC Five Star Business Finance raises $50M from TPG

Chennai-based non-banking financing company Five Star Business Finance Limited (Five Star), on Tuesday, announced that it has raised $50 million in a funding round led by existing investor, TPG Capital.

The company’s first investor, Matrix Partners India, is still an investor in the company along with existing investors Norwest Venture Partners, Sequoia and Morgan Stanley.

According to various media reports, this round puts the company’s valuation at $950 million. 

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This is the second round of investment made by TPG into Five Star Business Finance, and it comes within a year from the initial $100 million round raised in August 2018.

Speaking on the fund raise, Lakshmipathy, Chairman and Managing Director, Five Star, said, 

“Five Star’s approach is laser focussed on providing small business loans to underserved customers. Our strong management team has driven rapid growth after building a robust foundation. With an acute focus on profitability and asset quality, we’ve created a scalable business model recognised by all of our investors and debt partners. Our vision is to double our AUM this year with continued asset quality to build towards IPO scale and look forward to continued support from our partners."

In a statement, the company said that it specialises in small business loans to underserved SMEs and micro-SMEs in Tier III-VI cities and towns. The company currently has about 200 branches spread across eight states in India.

Further, its current portfolio stands at about Rs 2,500 crores, with gross NPAs (Non-Performing Assets) standing at less than one percent.

While, Vikram Vaidyanathan, Managing Director, Matrix India commented,

“We’re privileged to be Lakshmipathy and Five Star’s first investor and have a ringside seat to their amazing growth journey. Their focussed product approach, critical underwriting process, profitability focus, and relentless execution has made them the market leader in their segment. We believe in their vision of creating a financial services institution with IPO scale and wish them godspeed on the journey ahead.“

Five Star aims to have a portfolio of about Rs 4,000 crores by the end of this fiscal year. The company has 2,250 employees.

(Edited by Saheli Sen Gupta)

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