Canada’s CDPQ to acquire 20% stake in Edelweiss ARC

The Dollar Business Bureau 

Caisse de Dépôt et Placement du Québec (CDPQ) on Monday said it plans to invest Rs.5,000 crores over the four years to acquire 20% stake in Edelweiss Asset Reconstruction Company (EARC).

The announced sum will provide Edelweiss Group with capital to invest in stressed assets and private debt opportunities in India. This will make it the single largest investment by an institutional investor in this sector.

CDPQ targets annual investments of Rs.1250 crores in stressed assets and specialised corporate credit, totaling Rs.5000 crores over a four-year period.

Their joint collaboration aims to channel between Rs.12,000-14,000 crores into private debt and restructuring of stressed assets in the country.

“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 Chief Executive Officer at CDPQ.

Praisind India’s dynamic market conditions and the government’s exceptional efforts to further improve it, Sabia said 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.”

“Recent reforms, like 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,” said Rashesh Shah, Chairman & CEO, Edelweiss Group.

The partnership creates one of the largest and most diversified credit investing platforms in India. This platform will invest in assets aimed at restructuring debt and turning around companies, as well as becoming the provider of financing to Indian entrepreneurs and companies. These investments will result in the purchase of nonperforming loans from Indian banks and investments in private debt of growing Indian companies.

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

The acquisition and shareholding are subject to standard closing conditions, completion of legal documentation and approval by regulatory authorities.