Five Star Business Finance IPO Oversubscribed by 2.5 Times on the First Day of GMP Today
Five Star Business Finance Limited is an Indian non-banking financial company that provides financial assistance to micro and small enterprises in the country. On Tuesday, the company opened its Initial Public Offering (IPO) for subscription, and the response was phenomenal. The issue was oversubscribed by 2.5 times on the first day of Grey Market Premium (GMP) trading.
What is an IPO?
An IPO is a process by which a company’s shares are offered to the public for the first time. Companies go public to raise capital to fund their expansion plans and offer early investors an opportunity to monetize their investments. IPOs are usually managed by investment banks, who are responsible for pricing the shares, marketing the IPO to institutional and retail investors, and distributing the shares.
The Five Star Business Finance IPO
Five Star Business Finance’s IPO opened on August 2, 2022, and will close on August 4, 2022. The IPO price band is set at ₹400-₹500 per share, and the company aims to raise ₹1,345 crores ($179 million) through the IPO. The IPO comprises a fresh issue of ₹1,000 crores ($133 million) and an offer for sale of ₹345 crores ($46 million) by the company’s promoters.
The Response on the First Day of GMP Trading
The response to the Five Star Business Finance IPO was overwhelming. The issue was oversubscribed by 2.5 times on the first day of GMP trading. The GMP is the premium that investors pay to buy shares of a company before its listing on the stock exchange. The strong demand for Five Star Business Finance’s IPO signals the investors’ confidence in the company’s prospects and management.
Why the Five Star Business Finance IPO is Attracting Investors
Five Star Business Finance is a well-established player in the Indian non-banking financial space, with a strong focus on micro and small enterprises. The company has grown at an impressive pace over the years, with its loan book growing at a CAGR of 61% between FY19 and FY21. The company has a diversified loan portfolio, with a focus on secured lending and a low non-performing asset (NPA) ratio.
Moreover, the Indian economy is experiencing a strong recovery, and the government’s focus on small and medium enterprises (SMEs) is expected to support the growth of non-banking financial companies (NBFCs) like Five Star Business Finance. The company’s management has a proven track record of navigating the challenging macro environment and delivering strong results, which has further boosted investor confidence in the IPO.
The Road Ahead
The strong response to the Five Star Business Finance IPO bodes well for the company’s future prospects. The funds raised through the IPO will help the company to strengthen its balance sheet, expand its loan book, and explore new growth opportunities. The management’s ability to execute its growth plans and leverage the favorable macro environment will be key to the success of the company in the long run.
Conclusion
The Five Star Business Finance IPO has generated significant interest among investors, with the issue being oversubscribed 2.5 times on the first day of GMP trading. The company’s strong track record, diversified loan book, and focus on micro and small enterprises have resonated with investors, who are optimistic about the future prospects of the company. The response to the IPO is a testament to the growing investor appetite for high-quality NBFCs in India, and the ability of well-run companies to raise capital in a challenging economic environment.
