Edelweiss targets $296m for distressed debt fund

The biggest asset restructuring company in India plans to raise capital via its alternative asset investment manager for a domestic vehicle investing in distressed assets.

Edelweiss Alternative Asset Advisors, the alternative asset management arm of Edelweiss Group, plans to raise $295.6 million (INR 20,000 million) for a distressed and stressed asset strategy, according to a statement.

The vehicle is called EISAF II Onshore Fund and Amit Agarwal, the head of Edelweiss’s Stressed Assets Strategy, will oversee the fund’s investments, a spokesperson confirmed with PDI but declined to comment further on the target return rate and investment period of the fund.

“Now what a lot of people are focused on is the NCLT (National Company Law Tribunal) cases, these are courts set up to specially handle the bankruptcy cases,” said Nitin Jain, the CEO of Global Asset & Wealth Management, Edelweiss Financial Services, in a separate interview with PDI on 26 March.

However, Chris Gradel, a founding partner of PAG, a Hong Kong-headquartered alternative investment firm, said that credit in India was not investable.

Speaking at the 71st CFA Institute Annual Conference held in Hong Kong about distressed debt opportunities in India, he said: “The protection was very weak as a creditor.”

PAG has been active in the Indian distressed debt market via non-bank financial companies since 2009, according to Gradel. “There is a genuine will to improve the credit system, and the new bankruptcy rule looks quite promising,” he noted, adding that, “We are watching it very closely. It looks interesting but we want to see the new rules tested before committing any capital.”

Edelweiss Group previously signed a four-year partnership agreement with Caisse de dépôt et placement du Québec (CDPQ), a Quebec City-headquartered Canadian pension fund in October 2016, according to the pension fund’s statement.

The agreement included CDPQ’s capital commitment sized up to $700 million that will provide Edelweiss Group with capital to invest in stressed assets and private debt opportunities in India.

It held a final closing on EW Special Opportunities Fund II at $350 million, according to PDI data. Edelweiss Group also has two real estate debt funds targeting $1 billion per vehicle: Edelweiss Distressed Fund and Edelweiss Residential Credit Fund.