GPs make partial exits from India's Five Star Business Finance
TPG Capital, Matrix Partners India, and Norwest Venture Partners have sold a combined 29.6m shares in India-listed Five Star Business Finance representing about 10% of its total equity.
The shares were priced around INR 730 on September 1, representing an approximately 5% discount to the closing price on August 31. TPG, Matrix, and Norwest realised about INR 6.6bn, INR 6.5bn, INR 5.5bn (USD 79.8m, USD 78.6m, USD 66.5m), respectively.
The stock declined marginally following the transaction and closed on September 1 at INR 728.5, giving the non-banking financial company (NBFC) a market capitalisation of INR 210bn.
Five Star went public in November 2022, opening at INR 449.95 and climbing as high as 539.9 in its first session. Matrix and TPG were the biggest sellers in the IPO, netting proceeds of INR 6.8bn and INR 5.7bn, respectively. At the time, Norwest received INR 2.9bn, while Peak XV Partners (then Sequoia Capital India) got INR 1.4bn.
TPG remains the largest shareholder with a 17.4% stake; it had 21.5% at the time of the IPO. Norwest retains an 8.1% stake, while Peak XV has about 4.7%. Matrix, the company’s first investor in 2014, appears to have achieved a full exit. Matrix owned 12.5% at the time of the IPO.
Five Star received around USD 480m across seven rounds, according to AVCJ Research. The most recent private round of meaningful size was a USD 234m investment led by KKR and Sequoia in March 2021 at a valuation of USD 1.4bn. KKR currently has an approximately 6% stake.
Five Star was founded in 1984 with a focus on micro, small, and medium-sized enterprises (MSMEs) and housing loans in lower-tier cities. Revenue was up 22% year-on-year to INR 15.3bn for the 12 months ended March 2023, with the company citing post-pandemic momentum on both operational and financial fronts. Net profit increased 33% to INR 604m.
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