Caisse de dépôt et placement du Québec (CDPQ) has agreed to invest about Rs 1,800 crore ($250 million) in the non-banking financial arm of Edelweiss Group, as the Canadian pension fund continues to bet big on Indian companies.
The planned investment by one of North America’s largest pension fund managers in ECL Finance Ltd will help establish a large and diversified credit platform in India, Edelweiss said in a statement.
This is the second partnership between Edelweiss and CDPQ. In late 2016, Edelweiss had tied up with CDPQ to invest in stressed assets.
“This new investment capitalizes on solid growth in the financing demand from SMEs and residential sectors, both of which being key drivers in sustaining India’s future growth,” said Michael Sabia, president and chief executive officer at CDPQ.
The investment expands CDPQ's exposure to India, where it has previously also invested in sectors such as power, renewable energy, banking and real estate. In an earlier interaction, Sabia had said that India’s share in CDPQ’s portfolio would triple in the next few years.
For Edelweiss, the deal with CDPQ adds to the list of big-ticket fundraising by its group companies in the past few months.
In Jauary, for instance, Edelweiss Alternative Asset Advisors Ltd raised Rs 9,200 crore ($1.3 billion) to invest in stressed assets.
Last month, Allianz Investment Management, part of German insurer Allianz Group, invested $200 million (Rs 1,420 crore) in a private debt platform of Edelweiss.
In February 2018, Edelweiss launched the Infrastructure Yield Plus Fund. This fund has a target size of $1 billion and has so far raised about Rs 2,500 crore ($360 million).
Edelweiss said ECL Finance will use the funds from CDPQ to boost its retail lending business. The diversified financial services group also said that ECL Finance aims to maintain strong organic growth as well as take advantage of any market consolidation opportunities.
Edelweiss had a credit book of around Rs 30,000 crore as of December 2018 across wholesale and retail lending segments.
ECL Finance was previously backed by Singapore sovereign wealth fund GIC. According to a July rating report by ICRA, ECL Finance became a wholly owned subsidiary of Edelweiss in September 2017 when the group bought out GIC's 7.8% stake.
The non-bank lender offers structured collateralised corporate loans, real estate financing, loans against shares, SME loans, loans against property, ESOP financing and funding for initial public offerings.
ECL Finance reported a net profit of Rs 462 crore on total income of Rs 3,060 crore for 2017-18, compared with a net profit of Rs 390 crore on total income of Rs 2,495 crore the year before.