Traders said that Five Star Business Finance Co Ltd investors were shocked after the company priced its initial public offering (IPO) below its unlisted market price.

The South-based lender is trading at Rs 525-530 per share in the unlisted market, while the IPO price range was fixed at Rs 450-474 per share, about 10.6% lower than the current unlisted price.

From its recent peak of Rs 730 per share in October 2021, the stock is down nearly 35% in the unlisted market. The IPO, a pure offer to sell, opened on November 9 and will be closed on November 11.

Five Star Business Finance isn’t the only company setting its price range well below unlisted market prices. IPO price ranges for AGS Transact Technologies, UTI Asset Management Co Ltd and PB Fintech were below grey market levels.

AGS Transact will list on the exchange in January 2022 with a price range set at 166-175 per share. Meanwhile, its pre-IPO unlisted price was around Rs 185-195 per share.

The same goes for the IPOs of UTI AMC and PB Fintech. UTI AMC was listed on the exchange in September 2020 with an IPO price range of Rs 552-554 per share, while the unlisted market price was around Rs 1,100 per share.

Paisabazaar’s parent company, PB Fintech, went public in November 2021 with an IPO price range of Rs 940-980 per share, although the pre-IPO share price was around Rs 1,900.

Five Star Business Finance was established in 1984 to provide secured business loans to micro-entrepreneurs and self-employed. As of June 30, 2022, the lender has an extensive network of 311 branches spread across approximately 150 districts, eight states and a federal territory, including Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka are its main states.

Anchor investors in the IPO will begin bidding on November 7. The rights issue will begin on November 16, with refunds starting on November 17 and equity deposits to the assignees on November 18. Shares will be listed on November 21. It has slashed its IPO size to Rs 1,960 crore from an earlier plan of Rs 2,752 crore.

For the June quarter, the lender reported an operating income of Rs 337.97 crore compared to Rs 300.52 crore a year ago. Net profit for the quarter was Rs 139.43 crore compared to Rs 101.57 crore a year ago. Total term loans stood at Rs 5,296.54 crore compared to Rs 4,577.51 crore last year. Expenses stood at Rs 568.43 crore versus Rs 333.16 crore.

Total borrowings increased from Rs 3,121.22 crore to Rs 2,520.32 crore. Gross non-performing assets (NPA) in fiscal 2022 were 1.1%, up from 1% a year ago. Net NPA fell to 0.7% from 0.8% last year.