CDPQ to invest $700m in Edelweiss for India credit deals

CDPQ will commit $150-175 million per year to Edelweiss over the next four years, according to a release. It will also take a 20% stake in Edelweiss Asset Reconstruction Company (EARC), which will invest up to $2 billion in distressed assets and private debt using both the funds committed by CDPQ along with capital raised from other investors.

Edelweiss aims to help companies restructure debt by buying non-performing loans (NPLs) from Indian banks, and to provide loans directly to growing Indian companies. CDPQ will take a seat on EARC's board and will oversee private debt and distressed asset opportunities on the investment committee of Edelweiss Group.

"By becoming a partner of Edelweiss, CDPQ is looking to support its growth for many years to come and, ultimately, participate in the emergence of new innovative and successful businesses in India," said Michael Sabia, president and CEO at CDPQ. "We believe India stands out as an exceptional country to invest in, given the scope and quality of investment opportunity, and the current government's intention to pursue essential economic reforms."

CDPQ is a long-term institutional investor that manages funds mainly for pension and insurance plans; it had C$256 billion ($195 billion) in assets worldwide as of December 2015. Earlier this year it opened an office in Delhi that will seek investments across all asset classes in South Asian markets, naming Anita Marangoly George, formerly of the World Bank, as managing director for South Asia.

India's distressed debt sector has seen a surge in investor interest lately, as the country's large volume of NPLs pressures bank balance sheets and regulators indicate willingness to give debt holders more power over non-performing companies.

A number of global investors, like CDPQ, have partnered with local operators to take advantage of their knowledge of the market. In August Apollo Global Management and ICICI Bank announced a joint venture for Indian distressed assets investments. Other partnerships announced this year include Canada Pension Plan Investment Board (CPPIB) and Kotak Mahindra Group and Brookfield Asset Management and the State Bank of India.

KKR also won regulatory approval in March to buy a stake in distressed asset manager International Asset Reconstruction Company.

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• Topics
• South Asia
• Financials
• Credit/Special Situations
• LPs
• India
• Caisse de depot et placement du Quebec (CDPQ)
• Distressed