Five Star Finance, one of the leading lenders for small business in India, announced that it has raised USD 234 Million in a funding round. The round was led by Sequoia Capital India.
The round also saw the participation of Norwest Venture Partners, KKR, TVS capital fund. After this investment, the company was valued at USD 1.4 Billion.
The company plans to utilize the capital raised to extend its business of lending money to provide the small business of the country, which consists of a growing and a large segment of the Indian economy.
The investment will be done through a collection of primary inoculate in the company and other shares sold by the remaining investor named Morgan Stanley Private Equity. The investors like TPG Capital and Matrix Partners are continuing to back the company.
Words from investors –
The investment sees existing investors Sequoia Capital India and Norwest strengthen their commitment to the Company.
G V Ravishankar, Managing Director, Sequoia India, remarked,
“Sequoia Capital India is delighted to be investors in Five Star, and is strong believers in their business model that bridges the large credit gap that exists for small and micro-enterprises. The strength of the founder and the management team, along with the credit processes are visible in how the company has navigated several small and large disruptions including demonetisation, GST and now COVID-19 related challenges.”
The firm is happy to strengthen its partnership with Five Star, as the company embarks on its next leg of growth – from being successful to becoming significant in the industry,” he added.
Niren Shah, Managing Director, Norwest India, remarked, “We are delighted to be deepening our partnership with Five Star as they reach 10x of the scale compared to when we first invested. Five Star has executed exceptionally towards its goal of funding and empowering micro-business entrepreneurs across India in a scalable way. Five Star is well-loved by its customers and continues to have the finest asset quality together with strong growth and robust profitability.”
About Five Star Finance –
Five Star Finance is a Non Banking Finance Company (NBFC) registered with the Reserve Bank of India (RBI). It focuses on lending money to small businesses to overcome financial impedance. The company intends to provide quality service to the customers.
Currently, it has 262 branches in eight states of the country, mainly in the southern and central part. The AUM of the company resides at USD 5.9 Billion, and with a GNPA of 1.29 per cent.
D Lakshmipathy, Chairman and Managing Director of Five Star Finance, shared his views on the investment raised –
“In our mission of ‘Funding the unfunded,’ we have created a niche for ourselves empowering small businesses and the self-employed across corners of India by providing them with reliable and responsible funding alternatives. We aim to achieve this social goal through grassroots efforts without compromising on the pillars of asset quality and profitability that are needed to build a sustainable institution of scale.”
“We are grateful to our existing investors – Sequoia Capital India and Norwest for further reposing their faith in us, and we are particularly excited to welcome our new investors – KKR through its Global Impact Fund, which shares our mission of financial inclusion – and TVS Capital, backed by one of the most respected business houses of South India. We are greatly thankful to Morgan Stanley Private Equity fund and specifically Arjun Saigal, for having been one of our earliest backers, and it is immensely satisfying to have been able to provide them with an excellent financial return,” he added.
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