March 6, 2021

Financial institution of Singapore, PEs bid for stake in Edelweiss Wealth

Mumbai: Financial institution of Singapore and international personal fairness funds together with Blackstone, KKR, Baring Non-public Fairness Asia and TA Associates have put within the first spherical of bids to amass a minority stake in Edelweiss International Funding Advisors (EGIA).

The funding and advisory enterprise of Mumbai-based Edelweiss Monetary Companies is valued at $800 million-$1 billion and is getting a minority companion for a 15-20% stake, mentioned 4 folks with direct data of the event.

“Presently, the bidders are finishing up due diligence and the second spherical of bids is predicted by the second week of July,” mentioned one particular person.

Beneath the EGIA umbrella, the group operates fee-based companies comparable to wealth administration, capital markets, asset administration and asset reconstruction. A stake sale will assist Edelweiss, which is battling rising dangerous loans and liquidity points, increase funds for its credit score companies.

Final yr, US-based Kora Administration invested $125 million (Rs 525 crore) whereas personal fairness agency Sanaka Capital put in $75 million in EGIA. They collectively maintain a couple of 12% stake in EGIA.

KKR declined to remark, whereas emailed queries to Blackstone, Financial institution of Singapore and Baring Non-public Fairness Asia, Edelweiss and TA Associates remained unanswered.

Edelweiss Wealth Administration offers advisory distribution, broking and asset providers, ESOP and margin funding. It advises property of over Rs 1.11 lakh crore as of December 31, 2019. Belongings beneath administration of Edelweiss Mutual Fund stood at Rs 25,250 crore as of March 31.

Edelweiss ARC continues to be the biggest asset reconstruction firm within the nation. It generated web liquidity of Rs 1,000 crore by way of the Essar Metal decision final yr. As of December 31, 2019, the asset reconstruction enterprise had AUM of Rs 43,100 crore, capital employed of Rs 8,600 crore and recoveries of Rs 8,100 crore.

Edelweiss Monetary Companies, the primary holding firm, does credit score, franchise and advisory and insurance coverage. Whereas insurance coverage and credit score are already separate corporations, the potential transaction will see the creation of a 3rd agency, majority-owned by Edelweiss and with outdoors buyers.

Edelweiss Monetary Companies had reported a revenue after tax of Rs 363 crore for the 9 months ended December 2019, in contrast with Rs 1,338 crore a yr earlier. Its web income declined 4% to Rs 7,579 crore on this interval.

NBFCs are beneath stress as a consequence of tight liquidity situations prevailing over the previous 9 months. Corporations comparable to Edelweiss are affected by a protracted slowdown in the true property sector, coupled with the liquidity crunch within the total market.