Five Star Business Finance, which provides small business loans and mortgage loans to micro-entrepreneurs and the self-employed, made a muted debut on NSE and BSE on Nov. 21. It was quoted at a 5 percent discount to the 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 1.10 percent.
Headquartered in Chennai, the company provides secured business loans to micro-entrepreneurs and the self-employed, which are largely excluded by traditional finance institutions. All of its loans are secured by the borrowers’ property (SORP or self-occupied housing.
The listing was in line with investor reaction to the IPO, which closed earlier this month with an overall booking of 70 percent.
The IPO, to raise up to Rs 1,960 crore, included an offer of sale (OFS) by existing shareholders, meaning the company would not get any proceeds from the issue.
Of the total issuance, 50 percent was reserved for qualified institutional buyers, 15 percent for high net worth individuals and the remaining 35 percent for retail investors.
The IPO was available for subscription from November 9 to November 11.
Potential investors could bid for Five Star Business Finance shares in a price range of Rs 450-474 per lot in multiples of 31 under the IPO – translating to Rs 13,950-14,694 per lot.
What should investors do?
Parth Nyati, founder of Tradingo, said, “Five Star Business Finance has made its debut at Rs. 468.80, or (-1.10 percent) above the issue price. The company’s muted listing can be attributed to unexciting investor subscription levels, stiff competition and rising interest rates, which pose major threats. Some of its peers are available at a better price on the secondary market; those who have signed up for listing profits can keep a stop loss of Rs. 460 in place.”
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