Five Star Finance raises $234 million from Sequoia, KKR, valued at $1.4 billion

Five Star Business Finance has raised $234 million in primary and secondary capital and has been valued at $1.4 billion, up from $950 million in July 2019, the small business lender said on March 26, making it India's fourth unicorn in 2021.

The round included primary capital and a secondary sale of shares by Morgan Stanley Private Equity. Existing investors Sequoia Capital and Norwest Venture Partners, along with two new investors—PE giant KKR and TVS Capital—participated in the round.

The non-banking lender is the fourth startup in the country to be valued at over a billion dollars this year after Digit Insurance, SaaS firm Innovaccer and business to business marketplace Infra.market.

Founded in 1984 by VK Ramanathan, Five Star Finance was focused on consumer and auto loans. Ramanathan later handed over control of the business to Lakshmipathy, a relative. The company shifted focus to small and medium businesses (SMEs) in 2005 and saw its business grow. Till 2004, it had a loan book of less than Rs 1 crore, which grew to Rs 100 crore by 2012. The real growth, however, has come since 2012, as the business has grown 20 times since.