CDPQ, a Canada-headquartered long-term institutional investor that manages funds primarily for public and para-public pension and insurance plans, will acquire a 20% stake in Edelweiss Asset Reconstruction Company (EARC).
The agreement includes target investments of $600-700 million by CDPQ over four years that will provide Edelweiss Group with capital to invest in stressed assets and private debt opportunities in India.
A company statement said the platform will invest in assets with the aim of restructuring debt and turning around companies, as well as becoming the provider of financing to Indian entrepreneurs and companies.
These investments, to be carried out by Edelweiss ARC and through different Edelweiss funds, will result in the purchase of non-performing loans from Indian banks and investments in private debt of growing Indian companies.
“Recent reforms, like the Bankruptcy Act, have the potential to transform the pace of reconstruction and resolution in India’s stressed and distressed market thus creating a much larger opportunity. We are pleased to partner with CDPQ, one of the largest and most respected pension fund management companies in the world, to help finance, restructure and grow financially viable businesses in India” Rashesh Shah, chairman & CEO, Edelweiss Group, said.
In addition to CDPQ’s proposed 20% stake, other shareholders in EARC will be a Scandinavian insurance company with a 4% stake, 16% will be held by Indian investors and the balance by the Edelweiss Group. The acquisition and shareholding as mentioned above are subject to standard closing conditions, completion of legal documentation and approvals by regulators.
CDPQ opened CDPQ India, its New Delhi-based office, in March 2016.