Five Star Debt (IFC-49172)

Countries
  • India
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Approved
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
C
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Apr 2, 2024
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
FIVE-STAR BUSINESS FINANCE LIMITED
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Finance
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 60.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Jul 24, 2024

Disclosed by Bank Apr 25, 2024

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Can you contribute information about this project?
Contact the EWS Team

Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

According to the Bank’s website, the proposed investment comprises of an IFC own account debt investment of up to INR5 billion (approximately US$60 million) in Five Star Business Finance Limited (Five Star, or the Company). The entire proceeds from IFC’s investment will be utilized by the Company for growing its business loans portfolio targeting small business owners (micro-entrepreneurs) and self-employed individuals. At least 55% of the investment proceeds will be utilized by the Company for on-lending to women as primary borrowers.                                                   

Early Warning System Project Analysis
For a project with severe or irreversible impacts to local community and natural resources, the Early Warning System Team may conduct a thorough analysis regarding its potential impacts to human and environmental rights.

The proposed project comprises of debt investment of up to US$60million in Five Star Business Finance Limited (Five Star, or the Company) through senior secured non-convertible debentures for a tenor of up to 4 years. The use of proceeds will support micro entrepreneurs and self-employed individuals. The project presents limited to no environmental and social (E&S) risks and impacts and is categorized as Category FI-3 in accordance with IFC's Environmental and Social Sustainability Policy.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.

The proposed investment comprises of an IFC own account debt investment of up to INR5 billion (approximately US$60 million).

Financial Intermediary
A financial intermediary is a bank or financial institution that receives funds from a development bank. A financial intermediary then lends these funds to their clients (private actors) in the form of loans, bonds, guarantees and equity shares. Financial intermediaries include insurance, pension and equity funds. The direct financial relationship is between the development bank and the financial intermediary.
Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

Five Star is a Non-Banking Financial Company (NBFC) focused on serving the underserved micro, small, and medium enterprises (MSME) segment in India, by providing small ticket secured financial solutions to small business owners (micro-entrepreneurs) and self-employed individuals who are largely cut-off from the formal lending ecosystem. As of December 2023, the Company held assets under management (AUM) of approximately US$1.1 billion. It has a distribution network of 480 branches across 10 states and union territories through which it reaches these underserved customers.

The Company is listed on the Bombay Stock Exchange and National Stock Exchange and has a market capitalization of approximately US$ 2.4 billion as of April 23, 2024. As of December 31, 2023, on a fully diluted basis, 18.29 percent of the Company’s shares were held by the individual promoters & promoter group, and 81.71 percent of Company’s shares were held by others (foreign institutional investors, domestic institutions public shareholders and others).


Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

Five Star Business Finance Limited
prashanth@fivestargroup.in

ACCESS TO INFORMATION

You can submit a request for information disclosure at: https://disclosures.ifc.org/#/inquiries

If you believe that your request for information from IFC has been unreasonably denied, or that this Policy has been interpreted incorrectly, you can submit a complaint at the link above to IFC's Access to Information Policy Advisor, who reports directly to IFC's Executive Vice President.

ACCOUNTABILITY MECHANISM OF IFC/MIGA

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org

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How it works