Five Star Business Finance, which provides small business loans and mortgage loans to micro-entrepreneurs and self-employed individuals, made a muted debut on NSE, and BSE on November 21. It got listed at a discount of 5 per cent to its issue price of Rs 474. It started trading at Rs 449.95 on the BSE. On the NSE, it started trading at Rs 468.80, down by 1.10 per cent.
Headquartered in Chennai, the company provides secured business loans to micro-entrepreneurs and self-employed individuals, who are largely excluded by traditional financing institutions. All of its loans are secured by borrowers’ property (SORP or self-occupied residential property.
The listing was in line with investors’ response to its IPO, which concluded earlier this month with an overall booking of 70 per cent.
The IPO, to raise up to Rs 1,960 crore, comprised an offer for sale (OFS) by existing shareholders, meaning the company would not get any proceeds from the issue.
Out of the total issue, 50 per cent was reserved for qualified institutional buyers, 15 per cent for high-net-worth individuals and the remaining 35 per cent for retail investors.
The IPO was available for subscription for from November 9 to November 11.
Potential investors could bid for Five Star Business Finance shares in a price band of Rs 450-474 apiece in multiples of 31 under the IPO — which translates to Rs 13,950-14,694 per lot.
What should investors do?
Parth Nyati, Founder at Tradingo, said: “Five Star Business Finance has debuted at Rs. 468.80, i.e., (-1.10 per cent) over its issue price. The company’s muted listing can be attributed to unexciting investor subscription levels, high competition, and rising interest rates, which are big threats. Some of its peers are available at a better price in the secondary market; those who applied for listing gains can keep a stop loss of Rs. 460 in place.”
