2018-08-01

Matrix Partners- backed Five Star Business Finance raises USD 100 Million from TPG

Mumbai, India – August 1, 2018: Five Star Business Finance Limited (Five Star), a fast-growing, fully-secured small business financing company focused on South India, today announced that it has signed a definitive agreement, with TPG, an alternative asset firm. Existing investors Norwest Venture Partners, an investment fund managed by Morgan Stanley, and Sequoia Capital also participated in the round. The company’s first investor, Matrix Partners India, continues to stay invested in the company.
 
Five Star is a non-bank finance company providing loans to nearly 40,000 customers. The company focuses on lending to the under-banked population, which typically lacks the financial records necessary to participate in the organized financial sector. Five Star’s customers include small business owners such as single shop retailers like vegetable vendors, provision stores, food retailers and self-employed individuals. The company maintains a healthy asset quality, managing approximately Rs. 1220 crores in assets across more than 150 branches.
 
“Our 30 years of experience as a hands-on partner to our customers has led us to establish a business model that directly addresses the needs and risks unique to their businesses,” said D. Lakshmipathy, Chairman and Managing Director, Five Star. “In TPG we’ve found a partner that is fundamentally aligned with our mission to empower India’s under-banked segment. The firm has a long track record of partnering with financial services companies like us that are providing risk-focused, market-specific tools to help businesses grow. This investment in us is a testament to our success and potential as an organization, and we look forward to working together to continue to grow the company.” 
 
Vikram Vaidyanathan, Managing Director, Matrix India added, “We’re privileged to partner closely with Mr Lakshmipathy and the management team at Five Star at an early stage. We believe their focused execution balancing growth with asset quality sets them apart. We believe in their vision of creating a SME centric financial services institution and welcome TPG to the partnership”.


 “For many years, small enterprises across India have struggled to gain access to traditional financial systems due to their inability to meet formal requirements for credit. In South India and across the country, demand for funding continues to significantly outpace supply,” said Puneet Bhatia, Managing Partner at TPG Capital Asia. “Five Star is bridging the funding gap for small business owners, providing them with tailored, risk-conscious financial solutions. We are impressed by the company’s differentiated business model and skilled team, and are pleased to partner with them in their next stage of growth,” added Gaurav Trehan, Partner at TPG Capital Asia.
 
About Five Star Business Finance
Five Star Business Finance is a registered non-banking finance company and is headquartered in Chennai. The company was founded in 1984 and has over the years evolved into a specialist business finance company focusing on fully secured small business loans. The company has its presence in six states of India with over 150 branch locations.  The company enjoys a healthy asset quality, managing approximately Rs. 1220 crores as of June 30, 2018. As of that date, Five Star’s overall employee base stood at 1450. For more information, visit www.fivestargroup.in
 
About Matrix Partners India
Matrix Partners India is an investment firm with INR 4,500 crores under management. Founded in 2006, the firm invests in companies targeting the Indian consumer and enterprise market at the seed, early and early growth stages. Matrix India has invested in several market leading companies such as Ola (local transportation), Quikr (online classifieds), Practo (digital health platform), Dailyhunt (mobile local language platform), Treebo (digital hotel chain), Mswipe (mobile POS), Five Star Finance (SME lending), Razorpay (payments), OfBusiness (credit led B2B marketplace), CreditVidya (Fin-tech SaaS) and ZipLoan (small business lending) among others. Matrix India has advisory offices in Bangalore, Delhi and Mumbai. Matrix Partners has a global network of funds investing in the US, China and India with US $4 billion under management. Further information is available at www.matrixpartners.in
 
About TPG
TPG is a leading global alternative asset firm founded in 1992 with approximately $84 billion of assets under management and offices in Austin, Beijing, Boston, Dallas, Fort Worth, Hong Kong, Houston, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, San Francisco, Seoul, and Singapore. TPG’s investment platforms are across a wide range of asset classes, including private equity, growth venture, real estate, credit, public equity and infrastructure. For more information, visit www.tpg.com