India's Five Star raises $50m round led by TPG

The round brings Five Star’s valuation to “near unicorn status,” CEO Rangarajan Krishnan told Indian media. It follows a $100 million round last August, also led by TPG, with participation by existing investors Norwest Venture Partners, Morgan Stanley Private Equity Asia (MSPEA), and Sequoia Capital, and a $100 million round of debt financing led by Franklin Templeton earlier this year.

Founded in 1984, Five Star specializes in small ticket business and housing loans for underserved communities in lower-tier Indian cities, typically lending up to INR400,000 ($5,788) to businesses and INR700,000 to home buyers. It takes property as security against its loans, and claims to have a gross non-performing asset level of less than 1%.

Five Star has 183 branches across eight states, with a loan book of INR20.6 billion as of March 2019, up from INR9.7 billion the year before. Revenue grew from INR1.96 billion to INR4.02 billion over the same period, while net profit grew from INR542 million to INR1.6 billion. The company plans to use the new capital to grow its loan book to INR40 billion by next March.

Investor confidence in India’s NBFCs was shaken last year after institutions faced a shortage in liquidity following the bankruptcy of Infrastructure Leasing & Financial Services that led to questions about the sustainability of the rapidly-growing sector.

However, these fears have been mostly allayed by a rapid return to stability aided by quick government intervention, and recent months have seen a number of investments in institutions including L&T Finance, Kinara Capital, and Dvara KGFS.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Financials
• Expansion
• India
• NBFCs
• Financial Services
• TPG Capital
• Growth capital