Five-Star Business Finance Limited, a South India-focused lender to small businesses, has raised $234 million from a consortium of leading global and Indian investment firms.
The funding round was led by existing investors Sequoia Capital India, Norwest Venture Partners, as well as new investors namely KKR and TVS Capital, the company said in a statement. It included primary capital and a secondary sale of shares by Morgan Stanley Private Equity. The company’s other existing investors – Martix Partners and TPG Capital – will continue to stay invested.
The investment valued the company at $1.4 billion.
Five Star plans to use the capital to expand its lending business, the statement added.
“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 grass-root efforts without compromising on the pillars of asset quality and profitability that are needed to build a sustainable institution of scale,” D Lakshmipathy, Five-Star Business Finance Chairman and Managing Director D Lakshmipathy said.
Five Star operates 262 branches across eight states of India in the Southern and Central part of the country. As of December 31, 2020, the company’s AUM stood at Rs 4,030 crore, and its GNPA stood at 1.29%.
Meanwhile, KKR’s investment, which is a part of its global impact strategy, marks KKR Global Impact Fund’s second investment in India and fifth in Asia Pacific.