US-based Kora Management to invest Rs 875 crore in Edelweiss Group

The investment by Kora Management is a part of Edelweiss' plan to separate its three businesses -- credit, advisory and insurance -- into distinct entities

Kora Management, an investment firm focused on the financial and technology sector, will invest Rs 875 crore ($125 million) in domestic financial services conglomerate Edelweiss. 

The New York-based investment company will initially invest Rs 525 crore ($75 million) in Edelweiss’ advisory business, which contributes nearly half of the group’s bottom line. 

Kota will invest the remaining Rs 350 crore ($50 million) at a later stage — the structure of which is being finalised. The Edelweiss group is eyeing total investment of Rs 1,400 crore ($200 million) for advisory business — which comprises asset reconstruction, wealth and asset management and capital markets.  The group is trying to rope in other investors to join this first external investment round for the advisory business, Edelweiss said in a release.

Sources said the Kora deal values the advisory business around Rs 8,000 crore. Shares of Edelweiss gained 1 per cent to end at Rs 144 on the BSE on Wednesday, valuing the company at Rs 13,440 crore.

Currently, Edelweiss has three key business verticals, which include credit (retail mortgage, business loans, margin financing); advisory and insurance. The group plans to separate these businesses into separate entities. “Each business group will have its own set of investors, a ring-fenced capital base, and an independent board,” the company said in release.

The credit and life insurance businesses have already had strategic investment by CDPQ and Tokio Marines, respectively. “Our customers will benefit immensely from Kora’s acumen in technology and financial services across emerging markets, and its investment will help us scale our businesses in a competitive market environment,” said Rashesh Shah, chairman and CEO of Edelweiss group.

“We work to be constructive partners to our portfolio companies and welcome the opportunity to partner Edelweiss,” said Kora’s founder and chief investment officer (CIO) Nitin Saigal.

The company’s wealth management vertical has assets under advice of Rs 1.1 trillion; the total assets under management of alternative asset management and mutual fund are around Rs 36,300 crore. Capital markets business comprises institutional broking and investment banking.