Japan’s SBI Holdings, Inc., is joining hands with Edelweiss Financial Services Ltd to set up a $100 million fund to invest in listed small and mid-cap companies in India. The fund will be jointly sponsored, with SBI Holdings putting in $75 million and the rest coming from Edelweiss.

The launch of a public market fund by SBI Holdings and Edelweiss highlights the continued interest in PIPE deals and focused, differentiated strategies. Several experienced Indian General Partners like ChrysCapital, Westbridge Capital and Nalanda Capital have been focusing on PIPE deals over the past few years.

PIPE investments have also become attractive since market regulator SEBI changed the takeover code last year and increased the mandatory open offer threshold from 15 per cent to 25 per cent. The initiative was aimed at increasing PE participation in the listed space, especially small and mid-cap firms.

Edelweiss currently has $380 million under management in the alternative assets management businesses. It raised a $230 million Edelweiss Special Opportunities Fund in 2011.

This will not be SBI Holdings’ first venture into the Indian private equity space. The firm had set up another joint venture fund with SBI Capital Markets Ltd in 2006 with a commitment of $100 million. The fund targeted $5 million-$10 million investments in technology and life sciences business and funded risk management and solutions company Aptivaa Consulting. However, the current status of the fund is not known.

Rashesh Shah-led Edelweiss Financial Services has recently changed its name from Edelweiss Capital in order to reflect its expanding business presence in areas like insurance and housing finance. Edelweiss has also expressed its desire for a banking licence besides building up 4.9 per cent stake in Catholic Syrian Bank Ltd, a Kerala-based private sector lender. The company has recently formed Edelweiss Tokio Marine Life Insurance, a joint venture with Japan’s Tokio Marine.

Shares of Edelweiss were trading at Rs 31.50 a unit on the BSE at 12:42 pm on Monday, down 0.16 per cent from the previous close.

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