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Edelweiss’ private-credit fund raises $1.3 bn for investment in stressed assets
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Edelweiss Alternative Asset Advisors Ltd, a unit of Edelweiss Financial Services Ltd, has raised Rs 9,200 crore ($1.3 billion) for investment in the stressed space through its India fund, a top executive said in a press conference. 

The private-credit fund would look at making investments with an aim to turn around non-performing assets. These investments could be a combination of last-mile financing, financial restructuring and operational turnaround assistance.

Of the Rs 9,200 crore ($1.3 billion) raised by Edelweiss India Special Asset Fund-II (EISAF-II), about $300 million (Rs 2,132 crore) is anchor commitment from group firm Edelweiss Asset Reconstruction Company and another $100 million (Rs 710.6 crore) from domestic investors, said Rashesh Shah, chairman and chief executive of Edelweiss Group. The rest comes from global investors including pension funds and insurers.

“The fundraising is by far the largest-ever from India and we believe is the largest in Asia under a private-debt strategy in the last year,” he added.

The fund is focused on deals in the range of Rs 200-400 crore. It can make larger co-investment through Edelweiss Asset Reconstruction Company and other investors. 

Shah said, “We have already deployed more than half of the fund. We expect to make another 20-30 transactions in the next 18-24 months.” Shah added, “We don't want to have more than Rs 500 crore exposure to a single account. Based on the complexity of the deal that we strike, the private-credit fund can generate anywhere between 11% and 20% annualised return.”

Venkat Ramaswamy, executive director, Edelweiss Financial Services Ltd, said, “Edelweiss is the pioneer in the alternatives space and a clear market leader in the distressed credit space in India. Along with our asset reconstruction company, we manage over Rs 54,000 crore ($7.8 billion) of assets.”

Other funds of Edelweiss

Other funds that Edelweiss manages include Edelweiss Stressed and Troubled Assets Revival Fund and Edelweiss Asset Reconstruction Fund-I.

The Edelweiss Group has raised several funds, including pre-IPO fund Edelweiss Crossover Opportunities Fund, Edelweiss Real Estate Opportunities Fund and a $1 billion infrastructure fund. IPO is initial public offering.

In 2018, Edelweiss launched Infrastructure Yield Plus Fund, which has raised Rs 2,500 crore ($360 million). In October last year, Sekura Energy Ltd, a platform backed by Edelweiss Infrastructure Yield Plus Fund, acquired a stake in two operating power transmission assets owned by Essel Infraprojects Ltd, the infrastructure arm of the Essel Group.

The fund made the first close in May last year at Rs 2,000 crore ($297 million then). It is looking to make a final close within the next six months from now.

In November last year, Edelweiss Special Opportunities Fund, a structured credit fund, increased its exposure to Kishore Biyani-led Future Group.

Private credit

Over the past few years, banks have progressively shied away from aggressive private debt financing because of burgeoning bad loans, leaving the door open for non-banking financial companies (NBFCs).

However, in the aftermath of defaults by Infrastructure Leasing & Financial Services (IL&FS), which have cast a shadow over NBFCs, the liquidity crunch has worsened. This could open up the market for private debt alternative investment funds like EISAF-II.  

In November last year, VCCircle reported that Hong Kong-headquartered alternative asset management firm Baring Private Equity Asia (BPEA) is on the road to raise what would be one of the largest India-dedicated private credit funds.

In the past two years, several other alternative asset managers have launched credit funds in the region.

For instance, Bain Capital closed a $6 billion Asia credit fund this year.

In January, KKR announced the launch of a $2.24 billion global credit fund. KKR also has a credit platform for India, although it lends via an NBFC as well as an India-dedicated credit fund.

KKR’s Indian NBFC has received investments from Abu Dhabi Investment Authority.   

UTI Capital Pvt. Ltd, the alternative investment unit of UTI Asset Management Company Ltd, had set up a debt fund after hiring Rohit Gulati and his team from Religare Capital Markets.

The fund, which has a target corpus of Rs 750 crore and a greenshoe option of Rs 250 crore, had hit the first close at Rs 480 crore last November.

Other firms raising private debt firms include Avendus Finance Pvt. Ltd, the credit solutions arm of investment banking firm Avendus Capital Pvt. Ltd, which launched a Rs 250 crore structured credit fund.

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