CDPQ to invest $255m in Edelweiss' India NBFC
Caisse de dépôt et placement du Québec (CDPQ) has agreed to invest INR18 billion ($255 million) in ECL Finance, a non-banking finance company (NBFC) owned by India’s Edelweiss Group.
CDPQ will invest across three tranches, with $150 million committed on closing and $50 million at the end of the first and second years after the transaction. According to a regulatory filing, CDPQ will likely own an equity percentage in ECL in the teens after the final tranche is completed.
The investment builds on the existing relationship between CDPQ and Edelweiss, which began in 2016 when CDPQ committed to invest up to $700 million in Edelweiss ARC, the group’s asset reconstruction company. That transaction was intended to give CDPQ exposure to India’s distressed debt sector, and the new commitment extends the pension plan’s presence into the broader Indian credit opportunity.
ECL will consolidate Edelweiss’ various credit businesses, with Edelweiss Housing Finance and Edelweiss Retail Finance merging with ECL. Edelweiss currently has a loan book across its credit businesses of around INR300 billion, with retail credit comprising 44% of the total. The new capital will be used to invest in technology and expand ECL’s geographic footprint, along with taking advantage of industry consolidation opportunities.
“We are glad to strengthen and expand our partnership with Edelweiss Group, with whom we share a common mindset and who has one of the most innovative credit investing platforms in India,” said Michael Sabia, president and CEO of CDPQ, in a statement. “This new investment capitalizes on solid growth in the financing demand from small to medium-sized enterprises and residential sectors, both of which are key drivers in sustaining India’s future growth.”
Edelweiss is one of India’s leading diversified financial services companies, providing a broad range of financial products and services to a diversified client base including corporations, institutions, and individuals. Its business lines include credit, wealth and asset management, and insurance. Recently the group raised INR92 billion for an investment fund focused on Indian distressed assets through its alternative investment arm, Edelweiss Alternative Asset Advisors.
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