Edelweiss Capital, the Rs 1,000-crore major in the non-banking financial services sector, is busy raising its just-launched $400-million distressed assets fund. The firm is likely to make the first close of the fund in December at $100 million. Edelweiss Alternate Asset Advisors (EAAA), the alternative investments arm, will look after the distressed assets business.

The fundraising will be done in two parts where the offshore fund is named as Edelweiss Special Assets Fund while the domestic fund is named as Assets Reconstruction Fund. The fund will be fully raised by mid-2011.

Speaking to VCCircle, Venkat Ramaswamy (in pic), Executive Director and Co-Founder of Edelweiss, said, “The increasing number of large distressed loans in the Indian banking sector brings immense opportunity to this space. We are expecting more than 20% return from the business. Though the fundraising environment remains tough, we expect to raise $400 million by June 2011. We are in talks with global  institutional investor, family houses and HNIs."

The fund would be deployed in next 3.5-4 years. Edelweiss will acquire equity in the range of 10-30% in small and mid-sized companies.

Edelweiss hired two senior industry veterans, Kishore Srinivasan (ex-ICICI Bank) and Sibi Antony (ex-IDBI Bank), to launch the funds. Srinivasan will look after offshore fundraising while Antony will raise the domestic fund. Kishore Srinivas was appointed last year as executive vice president at Edelweiss Capital. He has previously also worked at Avendus Capital as Executive Director and Asset Reconstruction Company (India) Ltd.

Siby Antony was hired in 2008 as executive vice-president of Edelweiss Alternate Asset Advisors. Antony, who was previously executive director at IDBI Bank, was involved in setting up and running Corporate Debt Restructuring forum, where banks jointly resolved bad loans as well as Stressed Assets Stabilisation Fund (SASF), a pool into which IDBI’s Rs 9,000-crore bad loans got transferred.

Late last year, Edelweiss made a first close on its Special Opportunities Fund at $105 million. This fund invests in 'transactions presenting special investment opportunities in India.'

Other institutions involved in the business of ARC are ICICI-promoted Asset Reconstruction Company of India (Arcil), UTI-promoted ASREC India Ltd, IFCI-promoted Assets Care Enterprise (ACE) Ltd, ADA Group-promoted Reliance ARC, Kotak Mahindra ARC, Pridhvi Asset Reconstruction and Securitisation Company and International Asset Reconstruction Company (IARC), formed by State Bank of India Chairman and telecom regulator M.S. Verma and former Bank of America CEO Arun Duggal.

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