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Edelweiss Group CEO Rasesh Shah. Photo: Abhijit Bhatlekar/Mint

Edelweiss closes EISAF II fund with $1.3 billion corpus

EISAF II is part of Edelweiss's alternative assets business, a nine-year-old venture that currently has $3 billion in assets under management

Mumbai: Financial services firm Edelweiss Financial Services Ltd on Thursday said it has closed its distressed assets focused fund EISAF II, raising a corpus of $1.3 billion.

The fund received commitments from global investors, including large insurance companies and pension funds from North America and Europe as well as high net-worth individuals and family offices in India and overseas. Edelweiss had raised $77 million in its first distressed focused fund in 2010.

The EISAF II fund is part of Edelweiss’s alternative assets business, a nine-year-old venture for the group, and currently has $3 billion in assets under management (AUM).

The investment mandate of EISAF II is to make value investments in stressed assets with an aim to turn around viable non-performing assets. The fund is focused on assets with established infrastructure, viable business models and potential of generating cash flows.

“Along with our asset reconstruction company (ARC), we manage over 54,000 crore ($7.8 billion) of assets. A distinct market opportunity, strong deal pipeline and our deep expertise in the space has fuelled strong investor appetite in this fund," said Venkat Ramaswamy, executive director, Edelweiss Financial Services.

Ramaswamy added that Edelweiss decided to raise a large fund focused on distressed assets, after it realized that the opportunity in distressed assets was much larger than what the group’s balance sheet could manage. “At the same time, we were moving towards investing in a business model of raising third party funds and investing our capital alongside these funds," he added.

The firm has already deployed 50% of the corpus of the fund and expects to deploy the remaining corpus over the next 18-24 months.

According to Rashesh Shah, chairman and chief executive of Edelweiss Group, investors looking at the distressed assets opportunity are targeting returns of 15-16% to 18-20%.

Shah added that Edelweiss has committed around $300 million of its own capital for the EISAF II fund.

“The group commitment will come from our ARC. The fund will invest alongside the ARC. For certain opportunities such as pre-NCLT deals, we will invest only from the fund," he said.

The firm has seen recoveries of around 7,000 crore in the last nine months, from a total outstanding debt portfolio of 45,000 crore that the group is managing, said Shah.

The successful debt resolution of Binani Cement Ltd was a major contributor to the recoveries seen by Edelweiss. Last year, creditors to Binani Cement, led by Edelweiss ARC, accepted UltraTech Cement’s 7,950 crore bid for acquiring the business.

“We expect around 8,000-9,000 crore recovery from Essar Steel," he added.