PAG buys majority stake in Indian wealth manager

AVCJ Research’s records indicate this is the firm’s first private equity investment of meaningful size in India. PAG – which hired Nikhil Srivastava from KKR last year to lead its local PE operation – expects to deploy up to $1 billion in the country over the next 2-3 years.

“The investment in Edelweiss Wealth marks a milestone in PAG’s investments in the India market,” Weijian Shan, chairman and CEO of PAG, said in a statement.

Edelweiss Wealth Management (EWM) – which has achieved a post-money valuation of INR44 billion ($596 million) following – is the second-largest non-bank wealth management business in India. It is a subsidiary of Edelweiss Global Investment Advisors, which also controls Edelweiss Asset Management (EAM), an alternatives and asset reconstruction platform. EAM is not part of this deal.

EWM claims to provide wealth management services to more than 2,400 of India’s wealthiest families as well as around 610,000 high net-worth individuals and other affluent clients. Assets under advisory totaled INR1.27 trillion as of June 2020, up from INR185 billion in 2015.

India’s wealth management industry as a whole is worth INR300 trillion, having grown at an annualized rate of 11.3% over the past five years. It expected to reach INR540 trillion over the next five years. According to Capgemini’s latest global wealth report, India is home to more than 263,000 high net worth individuals (HNWIs) – defined as those with investable assets exceeding $1 million.

“This investment endorses our core strategy of incubating businesses, building value and growing them into market leaders as they gradually move from interdependence to independence. We remain committed to unlocking value for businesses and shareholders alike and remain future-ready to ride the economic trajectory post-COVID,” said Rashesh Shan, chairman and CEO of Edelweiss Group.

Nitin Jain, CEO of EWM, added that the next big transformation for the company will be the use of assistive technology.

Edelweiss Group has operations spanning corporate and retail credit, wealth management, asset management, life insurance and general insurance, with INR2.07 trillion in assets as of March 2020. Revenue was INR96 billion and the company posted a net loss of INR20.5 billion. The wealth management business alone generated INR9.87 billion in revenue and a net profit of INR1.62 billion. Fee income for wealth management and asset management combined was INR10.9 billion.

The company’s initiative to build independently capitalized business units has seen several the arrival of several foreign investors. Tokio Marine holds 49% of the life insurance business. Caisse de dépôt et placement du Québec (CDPQ) agreed to invest INR18 billion in ECL Finance, a non-banking finance company (NBFC), last year, having previously committed $700 million Edelweiss’s asset reconstruction business.

Other private equity investments in India’s wealth management space include General Atlantic paying INR11.2 billion for a minority interest in IIFL Wealth Management in 2015, KKR buying Avendus Capital – which offers a range of financial services including wealth management – later the same year, and TA Associates backing Prudent Corporate Advisory Services in 2018.

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• Topics
• South Asia
• Financials
• Buyouts
• India
• PAG
• Financial Services