Five-Star Business Finance, a Chennai-based non-banking finance company that offers secured loans in the below ₹10 lakh segment, plans to raise about ₹250 crore in equity in order to support its growth plans.
The company, which has got funding from Matrix Partners and Morgan Stanley, will start the fund-raising process in the next one or two quarters.
The company’s loan book is close to touching ₹500 crore and it has set a target to increase it to ₹1,000 crore by next year. Its vision is to become a ₹3,000-crore company by 2020. “Given the growth we are anticipating, we will look for capital in the next one or two quarters. We are well-capitalised to meet our ₹1,000 crore target. But we need to funds to achieve 2020 targets and we are looking to raise about $35 million (about ₹250 crore) in equity,” K Rangarajan, Chief Operating Officer, Five-Star Business Finance, told BusinessLine .
In tune with its business plan, it plans to increase the number of branches from 100 to 150 next year by when its employee strength would increase by 400 to reach 1150.
“Our growth will primarily be driven by branch expansion,” he said, adding, “Today we are strong in Tamil Nadu and Andhra Pradesh and next year our focus will be to strengthen our presence in Telangana and Karnataka.”
The nearly three decades old Five Star Business Finance, since 2010, has been focussing on only two segments — small business and home loans.
In small businesses, it lends only to the services segment (shop owners, vegetable/fruit vendors, painters), not manufacturing SMEs.
In the home loan segment, it lends to people who may need money to construct houses on their own land as also for renovation of own houses. However, it doesn’t lend to apartment projects as of now.