CDPQ Join Hands With Edelweiss For $600-700 Million Credit Investment In India

Canadian pension fund manager CDPQ and India’s Edelweiss group have on Monday (03 october) signed a long-term partnership for target investments of $600-700 million over four years. The partnership will provide Edelweiss with capital to invest in stressed assets and private debt opportunities in India through one of the largest and most diversified credit investing platforms in the country. The deal makes greater synergy for the investment platform as CDPQ brings with it over five decades of experience in managing public funds along with Edelweiss’ significant experience and expertise in specialized corporate credit and especially in stressed asset investment.

As per the agreement, this platform will invest in assets with the aim of restructuring debt and turning around companies, as well as becoming the provider of financing to Indian entrepreneurs and companies. These investments, to be carried out by Edelweiss ARC and through different Edelweiss funds, will also result in the purchase of non-performing loans from Indian banks and investments in private debt of growing Indian companies.

Edelweiss had recently established a consulting team to add value and make operational improvements in promising industrial businesses with a focus on Remake in India.

“Edelweiss is not your typical financial institution. It has a strong entrepreneurial culture and is driven by the ambition to give smaller and younger Indian companies access to financing and improve their productivity. By becoming a partner of Edelweiss, CDPQ is looking to support its growth for many years to come and, ultimately, participate in the emergence of new innovative and successful businesses in India,” said Michael Sabia, president and CEO, CDPQ.

“We believe India stands out as an exceptional country to invest in, given the scope and quality of investment opportunity, and the current government’s intention to pursue essential economic reforms,” he added.

According to Edelweiss Group chairman Rashesh Shah, the recent reforms in India such as the Bankruptcy Act have the potential to transform the pace of reconstruction and resolution in India’s stressed and distressed market thus creating a much larger opportunity.

“We are pleased to partner with CDPQ, one of the largest and most respected pension fund management companies in the world, to help finance, restructure and grow financially viable businesses in India,” he said in a Monday statement.

With this, CDPQ aims to further its long-term commitment and actively participate in the growth of this sector as a shareholder of Edelweiss ARC (EARC). CDPQ will join on EARC’s board of directors and also on the Edelweiss group investment committee overseeing private debt and stressed assets investments.

In addition to CDPQ’s proposed 20 per cent stake, the other shareholders in EARC will be a Scandinavian insurance company with a 4 per cent stake. While Edelweiss group will own hold 50 per cent stake in EARC, the rest 16 per cent will be held by Indian investors. This acquisition and shareholding are subject to standard closing conditions, completion of legal documentation and approval by regulatory authorities, a joint media release said.

CDPQ, an institutional investor that manages funds primarily for public and parapublic pension and insurance plans, had opened its Indian arm --CDPQ India with its office in New Delhi in March 2016. The Indian operations, mainly to identifying the best investment opportunities in the South Asian markets, are currently led by the newly appointed managing director (South Asia) Anita Marangoly George. While, Edelweiss group is one of India's leading diversified financial services company providing a broad range of financial products and services to a substantial and diversified client base that includes corporations, institutions and individuals. Its businesses are broadly divided into credit business, non-credit business and life insurance and it currently holds Rs 33,000 crore in net assets.