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Here’s what you need to know about the Chennai-based NBFC

Five-Star Business Finance Limited IPO today: The initial public offering (IPO) of Five-Star Business Finance opened for subscription on Wednesday, November 9, 2022. It opened for public subscription at 10 am and was subscribed around 1 per cent by 2:51 pm on the first day of bidding.

It received total bids for 2,91,493 shares across both the stock exchanges against 3,04,88,966 shares on offer, data from National Stock Exchange (NSE) showed.

The Rs 1,960 crore IPO of the Chennai-based non-banking financial company (NBFC) will be available for subscription till Friday, November 11, 2022, and the price band of the company has been fixed at Rs 450-474 per share.

The Five-Star Business IPO entirely an offer for sale (OFS) of shares to the tune of Rs 1,960 crore by existing shareholders and promoter entities. The company will not receive any proceeds from the issue.

The OFS will see the sale of shares to the tune of Rs 166.74 crore by SCI Investments V, Rs 719.41 crore by Matrix Partners India Investment Holdings II, Rs 12.09 crore by Matrix Partners India Investments II Extension, Rs 361.45 crore by Norwest Venture Partners X – Mauritius and Rs 700.32 crore by TPG Asia VII SF.

Half of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and the remaining 35 per cent for retail investors.

Half of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and the remaining 35 per cent for retail investors.

Five Star Business Finance provides secured business loans to micro-entrepreneurs and self-employed individuals, the two segments of borrowers largely excluded by traditional financing institutions. It has a strong presence in south India and all of their loans are secured by their borrowers’ property, predominantly being self–occupied residential property.

Investors who wish to subscribe to Five-Star Business IPO can bid in a lot of 31 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,694 to get a single lot of Five-Star Business Finance. The shares will be listed on both BSE and NSE.

The applicants also must note that the cut-off time for UPI mandate acceptance is Friday, November 11, 2022, upto 5:00 pm, the last day of IPO bidding. Further bids with confirmed status of mandate amount blocked (RC100) shall be considered as valid applications and hence, investors are advised to submit their UPI applications in IPO well in advance to avoid any last minute technical/systemic constraints that may hamper their ability to participate in IPOs by successfully accepting the mandate.

ICICI Securities, Edelweiss Financial Services, Kotak Mahindra Capital Company and Nomura Financial Advisory and Securities (India) are the book-running lead managers to the offer while KFin Technologies is the registrar of the issue.

Ahead of the IPO, the NBFC on Monday raised over Rs 588 crore (Rs 5,88,00,14,556) from 21 anchor investors in lieu of 1,24,05,094 equity shares at Rs 474 each, data from the stock exchanges showed.

The anchor investors include Smallcap World Fund, Fidelity Investments, Malabar Investments, Government Pension Fund Global, Abu Dhabi Investment Authority, Carmignac Gestion, Bay Capital, Segantii, SBI Life Insurance, HDFC Mutual Fund (MF), Baroda BNP Paribas MF, Edelweiss MF and Mirae MF among others.

The share allotment is likely to take place on Wednesday, November 16, 2022, and the shares are expected to be listed on Monday, November 21, 2022, according to the timeline given in the red herring prospectus (RHP).

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