Mumbai: Rashesh Shah, chairman and chief executive of Edelweiss Group, talks about the partnership with Canadian pension fund Caisse de depot et placement du Quebec (CDPQ) and their game plan for the stressed assets sector. Edited excerpts from an interview:
You are in the process of raising a large distressed asset fund. Where does that stand now?
Our total idea is to target and invest Rs12,000-14,000 crore in the stressed asset businesses. About Rs5,000 crore comes from CDPQ; Edelweiss itself has been investing up to Rs1,000-1,500 crore every year which over the next four years would be about Rs 4,000 -5,000 crore.
Another Rs4,000 crore would come from other investors in the stressed asset fund. Based on where we are now, we think that we can put up to Rs3,000 crore to work every year, so over four years, that does not sound too bad. There is a lot of interest for our stressed asset fund, but we wanted to close the CDPQ deal first. It should take about three to six months for the stressed asset fund to close.
How are you beefing up your turnaround operations?
We have hired a team of consultants, who have already started working on four or five projects at hand. We are also creating a network of experts of retired PSU executives and bank executives, who know how to deal with the stressed assets. Hard to put a number, but we would have about 200 such experts on our team right now, from segments like steel, cement, automobiles, etc. We are also tying up with a few consulting firms like EY, who can provide support in monitoring cash flows in these stressed companies.
Stressed assets is a broad term that can mean quite a few things. What are your focus areas in this?
This is a very flexible space for us. So what you say stressed could be either where the balancesheet is stretched, or where the company’s capital structure needs a rework or even where company needs extra capital.
There are a lot of opportunities that we are seeing where the asset is not stressed yet but if something is not done soon, it can get stressed.
A small amount of capital early on can mean a lot more than a large amount of capital when the firm has become stressed. This is why we have structured the capital in such a way that it is very flexible capital and is not limited to only one type of company.
What is the overall vision for Edelweiss?
The idea is to grow further. Historically if you see, we have grown organically very well, but as and when an opportunity comes along, we jump in. We think we need opportunities and also partners in capital. CDPQ gives us high quality capital and a high quality partner.