MICROCAPITAL BRIEF: India-based Five Star Raises Equity Financing from Matrix to Expand Branch Network, Increase Lending to Micro-, Small, Medium-Sized Enterprises (MSMEs)

Five Star Business Credits (Five Star), an Indian non-bank financial company that lends to micro-, small and medium-sized enterprises (MSMEs) in the country, recently announced that it has raised an undisclosed sum in equity financing from Matrix Partners India, the Indian subsidiary of US-based private equity firm Matrix Partners. Five Star intends to use the new capital to finance the expansion of its branch network and to expand its capital base for lending to MSMEs. The financial terms of the transaction have not been disclosed.

Five Star operates approximately 30 branches in the Tamil Nadu region of India. As of April 27, 2010, the company reported total assets of INR 260 million (USD 5.9 million). Five Star does not report to the US-based nonprofit microfinance information exchange, and neither additional nor newer financial data on the firm are otherwise available. Matrix Partners invests in seed- and growth-stage technology companies targeting the consumer and enterprise markets. As of April 2014, the firm has approximately USD 3 billion in assets under management.

By A’kos Szebeni, Research Associate

About Five Star Business Credits (Five Star):

Five Star Business Credits (Five Star) is a registered non-bank financial company based in the Indian city of Chennai. The company offers commercial loans to micro-, small and medium-sized enterprises (MSMEs) as well as housing, property and vehicle loans to individuals. Five Star operates approximately 30 branches in the Tamil Nadu region of India and reported total assets of INR 260 million (USD 5.9 million) as of April 27, 2010.

About Matrix Partners India:

Matrix Partners India is the Indian subsidiary of US-based private equity firm Matrix Partners. With approximately INR 30 billion (USD 500 million) in assets under management, Matrix Partners India invests in companies targeting the Indian domestic market with a “sector-independent” investment strategy. The firm invests up to INR 1.33 billion (USD 30 million) in each company depending on its stage of development.

About Matrix Partners:

Established in 1977, Matrix Partners is a US-based venture capital firm with its principal investment focus on the technology sector. As of April 2014, the firm has USD 3 billion in assets under management through a network of regional funds investing in China, India and the USA.

Sources and Additional Resources:

Matrix Partners India Press Release, “Matrix Partners India invests in Five Star Business Credits,” http://www.matrixpartners.in/press_detail.php?id=90

MicroCapital, March 18, 2014, “Grama Vidiyal Microfinance of India Borrows from World Business Capital,” https://www.microcapital.org/microcapital-brief-grama-vidiyal-microfinance-of-india-borrows-from-world-business-capital/

MicroCapital, June 13, 2012, “Incofin Investment Management Invests $2.4m in Equity in Indian Annapurna Microfinance,” https://www.microcapital.org/incofin-investment-management-invests-2-4m-in-equity-in-indian-annapurna-microfinance/

MicroCapital, May 5 , 2011, “Investor in Microfinance, Education, Health, Infrastructure, Matrix Partners India Raises $300m,” https://www.microcapital.org/microcapital-brief-investor-in-microfinance-education-health-infrastructure-matrix-partners-india-raises-300m/

MicroCapital, April 7, 2010, “Investment Firms Matrix Partners in India, Hivos-Triodos Fonds and Lok Capital LLC Invest $26.5m in Indian BASIX Microfinance Institution Bhartiya Samruddhi Finance Limited (BSFL),” https://www.microcapital.org/microcapital-brief-investment-firms-matrix-partners-india-hivos-triodos-fonds-and-lok-capital-llc-invest-265m-in-indian-basix-microfinance-institution-bhartiya-samruddhi-finance-limited-bsfl/

MicroCapital Universe Profile: Five Star Business Credits,
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Five+Star+Business+Credits

MicroCapital Universe Profile: Matrix Partners India, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Matrix+Partners+India

MicroCapital Universe Profile: Matrix Partners, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Matrix+Partners

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