OTPP puts $350m into Edelweiss' India private debt business

The deal comes within a week of PAG Asia Capital agreeing to buy a 51% stake in Edelweiss Wealth Management for $300 million. It is the second investment in Edelweiss Alternate Asset Advisors (EAAA) following a $200 million injection from Allianz Investment Management, a unit of insurance giant Allianz Group, in 2019.

EAAA claims to be India’s largest private debt manager with assets under management of around $3 billion. It focuses on performing and distressed private credit investment opportunities. A second fund for the strategy – Edelweiss India Stressed Asset Fund II (EISAF II) – closed at INR92 billion ($1.3 billion) last year. This represented a significant step up from Fund I, which closed at $77 million in 2010.

The larger size fund allows EAAA to do bigger deals, but it also signaled a fundamental shift in the firm’s investment approach to incorporate a side of the distress market that it previously neglected. “In the last fund we didn’t do any debt buyouts from banks; we only provided capital to companies that they could use to restructure their balance sheets,” says Venkat Ramaswamy, an executive director at Edelweiss, told AVCJ at the time. “This vehicle allows us to do direct debt buyouts as well.”

Prior to the final close, 50% of the corpus had already been committed to companies including Ballarpur Paper and Essar Steel, investments that concluded in 2017 and 2018, respectively. In both cases, Edelweiss, in partnership with its asset reconstruction unit Edelweiss ARC, bought over INR10 billion in loans held by the companies’ creditors.

Numerous global investors have launched Indian debt strategies in recent years, looking to take advantage of the large volume of bad loans in India’s banking system and moves by the government to give lenders more power to recover non-performing assets. 

“We are excited to invest with Edelweiss to bolster our exposure to the Indian credit market. This is an important milestone in our ambition to build multi-asset class exposure to India’s long-term growth story. As a global investor, Ontario Teachers’ hopes to leverage our select list of partners including Edelweiss for local insights and acumen as we navigate to grow profitably in this important market,” Ben Chan, regional managing director for Asia Pacific at OTPP, said in a statement.

Edelweiss 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 asset management business had INR508 billion in assets, of which INR217 billion was in private credit. It generated INR3.12 billion in revenue and INR220 million in net profit.

Caisse de dépôt et placement du Québec (CDPQ) is an investor in Edelweiss ARC, having committed $700 million to the business in 2016. It later agreed to inject INR18 billion into ECL Finance, a non-banking finance company (NBFC). Meanwhile, Tokio Marine holds 49% of the life insurance business.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Credit/Special Situations
• Expansion
• Restructuring
• India
• Edelwiess Alternative Asset Advisors
• OTPP
• Distress