Canadian pension fund picks up 20% in Edelweiss ARC

North America's largest pension fund managers Caisse de depot et placement du Quebec (CDPQ) and Edelweiss Group today signed a long-term agreement to invest USD600-700 million (Rs 5,000 crore) over the next four years in stressed assets and private debt opportunities here.
Under the agreement, CDPQ, which already pumped in around USD 1.5 billion in various domestic companies, will be acquiring a 20 per cent stake in Edelweiss Asset Reconstruction Company, which is the largest in the space with around Rs 30,000 crore of assets under management.
"Across our whole organisation, one of our top priorities is India as it has growth potential and strong fundamentals. Today, we are making an initial commitment of USD 300 million to this partnership," CDPQ president and chief executive Michael Sabia told reporters here today.

"Our goal is to keep growing our relationship and to do that we are ready to invest between USD 600-700 million over the next four years. In other words, roughly double the initial commitment that we are announcing today," he added.
Sabia said his fund sees two big opportunities in this partnership.
"First, by expanding credit opportunities, access to credit for Indian companies and by building with Edelweiss, a large and a growing platform to take on an important work of asset reconstruction," Sabia said.

Edelweiss Group chairman Rashesh Shah said: "We collectively aim to channelise Rs 12,000-14,000 crore, which includes Rs 5,000 crore from CDPQ over the next four years and investments from us and other institutional investors into the private debt and restructuring of stressed assets."

He said as part of this partnership, CDPQ will be acquiring a 20 per cent stake in Edelweiss ARC. But he did not disclose the value of the 20 per cent equity sale to the Canadian fund.
In addition to CDPQ's proposed 20 per cent stake, other shareholders in Edelweiss ARC will be a Scandinavian insurance company with a 4 per cent stake, 16 per cent by domestic investors and the balance by the Edelweiss Group.
The acquisition and shareholding are subject to approval by regulatory authorities.
"We do have interest areas like renewables, real estate,
logistics, financial sector, power sector. We are in active discussion with variety of domestic companies for equity investments," Sabia said.

Stressed reconstruction space is attracting lot of investment in recent past. In July this year, State Bank collaborated with Brookfield Asset Management to set up over USD 1 billion stressed asset fund.
Earlier in March, Kotak Mahindra Bank had tied up with Canadian Pension Plan Investment Board (CPPIB) to launch a USD 525 million fund to invest in the stressed assets.
The CPPIB had committed USD 450 million and Kotak committed USD 75 million.
Similarly, in August this year, Piramal Enterprises had roped in Bain Capital to launch a stressed asset fund which will have USD 1 billion in investible funds.