We are pleased to announce the completion of our 5th investment from TVS Shriram Growth Fund- 3 (TSGF3) in Five Star Business Finance Limited. Our INR 100cr investment for ~0.97% stake in the NBFC highlights our continued objective of financing SME lenders who are solving for the problem of “access”. Accordingly, Five Star Finance has a remarkable track record of successfully addressing the needs of the so called “Missing Middle” segment in MSMEs. This segment comprises of 53.3 million “own account enterprises”, of which a majority do not have any form of registration nor do they hire external labour on a regular basis.

Upon taking control of Five Star Finance in 2002, computer science engineer and first-generation entrepreneur - D Lakshmipathy, steered the company’s focus towards SME lending from its initial core business of consumer financing. The company underwent a significant business transformation under his leadership to eventually became a pioneer in the small business lending space. The NBFC primarily operates in the small business loan segment (₹ 3-5 lakhs ticket size), with loans backed by self-occupied residential property as collateral.

Five Star Finance has built up a strong presence in South India and demonstrated a 9x growth in AUM over the past 5 years. Moreover, the company has achieved this while continuing to maintain best-in-class operating and financial metrics. This coupled with the company's superior returns, cost to income ratio, and robust asset quality prompted TCF to actively track the company over the past 12 months. We believe Five Star is well poised to deliver high growth in the next 5 years, leveraging its strong market practice and operations excellence.

In this composite round of ~₹ 1,700 Cr, Five Star has raised ~₹ 520 Cr of primary investment as TCF joins KKR along with existing investors Sequoia Capital and Norwest Venture Partners. This investment marks yet another testament to our investment philosophy of backing the best NextGen entrepreneurs across businesses. We deeply subscribe to Mr. Lakshmipathy’s vision of building Five Star Finance into a pan India NBFC which will be among the top decile of players in this category. More importantly, we are proud to partner a company with a strong ESG framework, which is in line with TCF’s focus on building sustainable enterprises in the long run.

Team TVS Capital

It is always joyous to partner with best-in-class entrepreneurs and on this day, we wish to discuss one of our more successful business partners – Suryoday Small Finance Bank. The Listing of a portfolio entity is the ultimate aim for any Fund Manager and provides us with a sense of accomplishment which is even more invigorating than the returns from the investment.

Looking back at history; in 2007, we see a young but experienced and passionate man deciding to further the initiative of financial inclusion in the Indian Economy by catering to the ‘bottom of the pyramid’ Indians. The journey, as stated by the man himself, has been tremendously exciting with multiple ups and downs, but sheer determination, performance, and focus has enabled Suryoday to reach the stage they are in now.

Moving forward to 2017, Suryoday as a micro finance institution contested for the small finance bank license against several others. As a star performer which matched all of RBI’s criteria, Suryoday was awarded a Small Finance Bank License on 23rd Jan 2017. This marked the beginning of a new journey for Suryoday and it has not turned back since. It subsequently grew 4x in AUM from ~1,000 Cr to the ~4,000 Cr level it is at now.

TCF has always been resolute in its pursuit of “Empowering the Next Gen Entrepreneurs”. As such, Baskar Babu, a man with focus, passion, and the ability to deliver performance, ensured that Suryoday figured easily as a potential business partner for TCF. Further, we believed that the services being offered by Suryoday to unbanked India had significant potential for growth while also facilitating financial inclusion at a great scale. Despite the economy facing serious pull back post demonetization in Nov 2016, TCF decided to partner with Suryoday given the trust we had on management to deliver. TVS Capital continued its confidence in the bank by investing from 2 of its schemes (funds) in Feb 2017 and March 2019.

Overall, Suryoday has delivered a stellar performance over the last 4 years, setting new benchmarks for their peers consistently. Despite COVID being hard on the economy and businesses, Suryoday found a way to overcome the impact of the virus and was expeditious in its recovery. The confidence that many other investors have also shown in the bank over the last year further speak to the belief, hardwork and dedication of the management.

We are extremely proud to be partners with the bank and wish them immense success in their next chapter post the IPO. Great work @bhaskar Babu and team Suryoday. We are inspired by your journey.

We, at TVS Capital, continue our journey to “Empower the next gen entrepreneurs”.

Team TVS Capital Funds

TVS Capital Funds is pleased to announce the appointment of Alok Samtaney as an Investment Director, effective 1st April, 2019.

Alok brings with him more than 15 years of experience, with his last assignment at Sabre Capital as Investment Director. He has extensive experience across Private Equity and Financial Management.

In over twelve years in Sabre capital, Alok had led investments end-to-end, was a member of portfolio companies' boards and had executed successful exits. He brings with him deep knowledge of investing in sectors which strongly overlap with sectors that TVS Capital Funds is focussed on like, financial services, consumer goods and health sectors, besides extensive experience in, technology and hospitality services.

TVS Capital is confident that his wealth of experience and impeccable credentials will prove to be valuable in managing TSGF Fund 3 and for raising and managing future Funds.

Alok is a Chartered Accountant and an MBA from SP Jain Institute of Management and Research, Mumbai; he will operate from the Mumbai office TVS Capital Funds.