CDPQ backs Edelweiss’ second distressed debt fund

The Mumbai-based alternative asset manager has held a final close on its successor distressed vehicle on $1.3bn.

Edelweiss Alternative Asset Advisors held a final close on the second of its distressed fund series, EISAF II, on $1.3 billion in capital commitments in December 2018, Edelweiss Financial Services’ executive director and co-founder Venkat Ramaswamy told PDI yesterday.

Edelweiss AAA is the alternative asset management arm of Edelweiss Group, the Mumbai-headquartered financial services provider.

EISAF II is targeting an internal rate of return between 16 and 18 percent, net of fees. Investment activities for the fund are overseen by Amit Agarwal, head of Edelweiss’s Stressed Assets Strategy, as PDI reported in June 2018. The vehicle has a four-year investment period within a nine-year fund life.

Ramaswamy added that the fund will invest in stressed assets, targeting turnarounds in the corporate and real estate markets. In addition to rescue financing for entrepreneurs, such as working capital financing and debt restructuring, Fund II plans to source some deals through the group’s ARC platform, which acquires bank loans in India.

The investor roster in EISAF II includes insurance companies, pension funds, high-net-worth-individuals and family offices in India and overseas, according to a company statement.

It was confirmed to PDI that Quebec City-headquartered Canadian pension fund, Caisse de dépôt et placement du Québec, is acting as anchor investor in the fund. CDPQ’s commitment to the fund is based on a multi-year partnership with Edelweiss.

In October 2016, Edelweiss Group signed a four-year partnership agreement with CDPQ, the latter disclosed. The agreement included the Canadian pension fund’s commitment of up to $700 million for the restructuring of stressed assets and private debt investment opportunities in India.

The Canadian pension fund also announced in 2016 its plan to acquire a 20 percent equity stake in ARC.

Edelweiss Financial Services’ latest earnings results show that its asset management businesses managed $3 billion in alternatives as of end-September 2018. Edelweiss Financial Services is a holding company of the asset restructuring company.

Edelweiss Group managed over $7.8 billion (€6.9 billion) in assets as of mid-January 2019. The group’s allocation to its private debt strategy, including distressed debt and structured credit investments, accounted for 65 percent of its total alternative assets under management during the fiscal year ending on 31 March 2017, its 2018 annual report shows.