Edelweiss launches third credit fund, plans to raise US$1 billion

Mumbai: Edelweiss Global Wealth and Asset Management has launched its third credit fund, one where it plans to raise $750 million to $1 billion (~5,200 to ~7,000 crore).

“We got all approvals in March to launch the Edelweiss Special Opportunities Fund III (ESOF III), after which we have started marketing it to our clients,” said Hemant Daga, president and deputy chief executive of the Mumbai-based entity.

The first close is planned for the second half of this year, he said.

Of the previous tranches, ESOF I has been closed, with capital returned to the investors, while ESOF II is in the deployment stage, Daga added.

“Banks have largely been focusing on retail (to small borrowers) credit for the past few years. NBFCs (non-bank financial companies) have also reduced focus on wholesale credit. So, a market opportunity for wholesale credit has opened for funds significantly. Also, credit spreads have widened in the past few months. This makes wholesale funding a good opportunity for clients to participate in at this point,” he explained.

Edelweiss is not alone. US-based private equity fund KKR is in the market to raise a ~5,000 crore India-focused credit fund this year, according to sources. Mumbai-based Centrum is looking to launch a ~500 crore credit fund.

Early this year, Edelweiss also raised a $1.3 billion fund to invest in stressed opportunities. Daga said the new credit fund had a mandate to fund companies needing capital for growth.

The liquidity issue in NBFCs is temporary, he felt. “In the short and medium term, liquidity should return to normalcy. New avenues of capital will open up.”

Daga said they’d been slow on investing from the real estate funds for the past six months, as they are watching the situation. “We have large dry powder left, which is beneficial for us, given the current liquidity scenario. If there is good opportunity, we will deploy capital.”

In real estate, it has raised $600 million, with half still to be deployed. Edelweiss has also raised close to

$370 million so far for its $1-billion infrastructure fund. “We are confident that we will successfully close the funds in the next 12 months,” he said.

Vimal Bhandari, vice-chairman at Kirloskar Capital, says: “From an issuer perspective, since businesses are stressed and deleveraging through equity issuances is difficult, structured debt solutions provide an option to stretch out cash flow till the business cycle improves, though such options come at a higher cost of borrowing.”

 

 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.