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A fund managed by Morgan Stanley Private Equity Asia has invested ₹114 crore in Chennai-based non-banking finance company Five Star Business Finance Ltd.
This is the second institutional investor in Five Star, which had previously raised undisclosed amounts from Matrix Partners India.
Five Star will use the money to expand its business in southern States. It is now present in Tamil Nadu, Andhra Pradesh and Karnataka.
Five Star’s main business is lending to small businesses, which are mostly outside the formal banking system. It has also received housing finance licence from the National Housing Bank. Five Star, which has 67 branches now, will have 100 branches by this fiscal year-end, which number will go up to 250 by 2019.
For 2015-16, its loan book was ₹200 crore, up 50 per cent over the previous year. This number is expected to go up to ₹1,000 crore by 2019. Two-thirds of the business will come from the small business finance vertical and the rest from housing finance.
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