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Venture capital firm Matrix Partners India is reportedly gearing up to sell a 5.87% stake in non-banking lender Five-Star Business Finance Ltd, sources privy to the developments told CNBC-TV18. The potential divestment comes with an option to upscale the stake sale to 8.81%, sources told CNBC-TV18.
The issue size for the base transaction is set at ₹1,250.5 crore, with the flexibility to upsize to ₹1,875.7 crore. The issue price has been fixed at ₹730 per share, according to multiple people familiar with the development.
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 loans are secured by the borrowers’ property, predominantly being self-occupied residential properties.
The NBFC commenced operations in 1984 with a focus on consumer loans and vehicle finance. It changed its business approach in 2005 towards small business loan lending in urban, semi-urban markets and rural areas with growth potential. The Chennai-based non-banking financial company is backed by investors like TPG, Matrix Partners, Norwest Ventures, Sequoia, and KKR.
Shares of Five-Star Business Finance Ltd ended at ₹754.50, up by ₹0.40, or 0.053%, on the BSE.
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