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Edelweiss Group on Tuesday said CDPQ Private Equity Asia Pte Ltd has signed an agreement to invest over ₹1,800 crore (about $250 million) in ECL Finance, the non-banking financial company (NBFC) arm of Edelweiss Group.
CDPQ Private Equity is a wholly-owned subsidiary of Caisse de dépôt et placement du Québec (CDPQ), one of North America’s largest pension fund managers.
In a statement, the Group, which is a diversified financial services company, said: “The planned investment by CDPQ would contribute towards establishing a large and diversified credit platform in India. This proposed investment will close after customary regulatory approvals.”
The statement, however, did not disclose how much stake CDPQ Private Equity would get in ECL Finance. However, sources said it could be anywhere between 13 and 19 per cent.
Liquidity constraints
The investment comes in the backdrop of the NBFC sector facing liquidity constraints due to the ripple effect of debt defaults by IL&FS and some of its arms in the last six months or so.
“The agreement with CDPQ will enable ECL Finance to capitalise on opportunities in the credit market... It provides thrust to the business for technology and digital investments. This investment also ensures that ECL Finance has the requisite resources to maintain strong organic growth, as well as take advantage of any market consolidation opportunities,” the statement said.
CDPQ’s partnership with the Edelweiss Group began in 2016 with a significant investment in Edelweiss ARC, India’s largest asset reconstruction company.
Rashesh Shah, Chairman and CEO of Edelweiss Group, said, “... I expect this partnership to deliver tremendous value towards deepening the market and we are encouraged by this investment by CDPQ to partner with us on this journey.”
Michael Sabia, President and Chief Executive Officer at Caisse de dépôt et placement du Quebec, said: “We are glad to strengthen and expand our partnership with Edelweiss Group, with whom we share a common mindset... This new investment capitalises on solid growth in the demand for finance from SMEs and residential sectors, both of which are key drivers in sustaining India’s future growth.”
Shares of Edelweiss Financial Services jumped 10.9 per cent ₹154.70 on the NSE.
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