Non-banking finance company Five Star Business Finance has raised $50 million in its second round of funding led by private equity major TPG Capital. “The funds will be used for growing the existing portfolio and entering new geographies like central India,” said Rangarajan Krishnan, CEO, Five Star Business Finance. “Currently, we have a strong presence in the south. Now, we will enter more States.W e will become a pan-India player in the next two-three years,” he added.
As on date, the company has about 200 branches spread across eight States and UTs union territories and it would add 25 branches by March 2020.
Currently, the company has a portfolio of about ₹2,500 crore, with asset quality of sub-1% gross non-performing asset. It aims to take it up to ₹4,000 crore by March 2020.
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According to him, this is the second round of investment made by TPG Capital into Five Star Business Finance and it comes within a year from the initial $100 million round done in July 2018.
With this round, Five Star is close to attaining the coveted unicorn status (firms with a valuation of $1 billion and above). Now, the firm has a valuation of about $950 million.
“Five Star is one of the few NBFCs that have secured equity funding in challenging times like today, when the general investment climate for NBFCs has been tougher. It is because of the strong confidence TPG has in us,” he said.
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Chennai-based Five Star Business Finance is backed by marquee investors that include Matrix Partners, Morgan Stanley, Sequoia Capital, Norwest and TPG. It provides small business loans to its customers, who are generally missed out by mainstream lenders.