Assets Under Management AUM

Five Star Business IPO subscribed 38% on day 3, issuance ends today

New Delhi: Investors continued to distance themselves from Five Star Business Finance’s Rs 1,960 crore initial public offering (IPO) during the third and final day of the bidding process.

The company sells its shares in the range of Rs 450 to 474 each between November 9 and 11, with a lot of 31 shares. The question is completely an offer of sale (OFS).

According to BSE data, investors made bids for 1,15,33,953 equity shares or 38 compared to the 3,04,88,966 equity shares offered for subscription on Friday, November 11 at noon.

The quota of individual bidders was subscribed only up to 7%, while the allocation for non-institutional investors received only 4% of bids. But the share of qualified institutional bidders was reserved 1.17 times.

Incorporated in 1984, Five Star Business Finance is a Non-Banking Financial Company (NBFC) that offers secured business loans to micro-entrepreneurs and self-employed people. With over Rs 3,000 crore in assets under management (AUM), the Chennai-based company has the fastest growing AUM among its peers compared.

Brokerage firms remain mixed on the issue. Some suggested underwriting the issue with caution, but a majority find the valuations expensive, citing the full OFS nature of the issue.

The brokerage remains neutral on the matter, citing operating in a competitive environment and non-payment or default by their borrowers that could harm its business as the main risks to the business.

Five Star Business Finance is available at the upper end of the range at 3.7x P/BV and returns on net worth of 13.86%, and ROA is 7.5%. Five Star Business Finance is reasonably priced, Anand Rathi said with a “Subscribe for the Long Term” rating.

Capital Company and Nomura Financial Advisory and Securities are the issue’s managers, while KFin Technologies has been appointed as the issue’s registrar.

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