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Edelweiss amasses $900 mn for third structured credit fund
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Edelweiss Alternative Asset Advisors Ltd has raised Rs 6,600 crore ($900 million) for its third structured credit fund, the unit of financial services conglomerate Edelweiss Group said on Monday.

The Edelweiss Special Opportunities Fund-III received commitments from limited partners including Ontario Teachers’ Pension Plan Board (OTPP), Florida’s State Board of Administration and Swedish pension fund AP4.

A European insurance firm and an Australian pension fund were among the other LPs, Edelweiss said.

The announcement comes a month and a half after Edelweiss teamed up with Canada’s OTPP for its credit strategy.

The new fund is the largest credit vehicle that the asset manager has raised so far. Edelweiss Alternative had raised Rs 1,000 crore in 2010 for its first structured credit fund and Rs 2,000 crore for the second vehicle during 2015-2017. VCCircle had reported last year that Edelweiss Alternative was targeting as much as $1 billion for the third fund.

Edelweiss Group chairman Rashesh Shah said in a statement that banks and mutual funds have been receding from the structured credit space and this has accentuated the need for long-term flexible capital.

“This presents a huge opportunity for private debt players, and it’s reassuring to note that the present market environment has not deterred investors who are keen to participate in India’s long-term growth story,” he said.

The new vehicle is a seven-year, closed-ended fund. It will target a yield 16-18%, said Hemant Daga, CEO at Edelweiss Asset Management, which houses Edelweiss Alternative Asset Advisors.

The fund will provide long-term capital in the form of credit to companies looking to kick-start growth, he said.

“We believe, close-ended asset management vehicles are the preferred option for long-term credit investments as they are unlevered, patient capital vehicles,” he said.

Edelweiss has previously said it would invest in the credit markets from alternative funds instead of lending via non-banking finance companies, where the capital is more short term. Indeed, in August last year Edelweiss NBFC ECL Finance Ltd had sold its corporate loans at a haircut to stressed assets investor Ares SSG.

Shah also said that the new fund will focus on lending to companies which have healthy cash flows and provide collateral. The most important criteria for the fund would be the quality of the borrowers. Many good-quality borrowers with good assets are still liquidity-poor and the fund will look at lending to those companies, he said.

The fund will also focus on environmental, social and corporate governance requirements, as mandated by its LPs.

Edelweiss Asset Management currently has assets under management of Rs 75,000 crore, the company said. This comprises Rs 30,000 crore in alternative assets and Rs 45,000 crore in mutual fund assets.

It also houses stressed assets, real estate and infrastructure funds. It plans to raise a large real estate fund next year, Shah said. Last year, the company had marked the final close of a stressed assets fund at $1.3 billion.

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