Edelweiss Wealth Management, among the top-three private wealth managers with Rs 1.81 lakh crore of assets under management, has bought back 5.28 per cent of its shares from the partner PAG by paying Rs 230 crore, thus increasing the stake to 44.16 per cent.
Edelweiss Group Chairman and CEO Rashesh Shah told PTI that the transaction is as per the agreement signed in August 2020 when PAG, which is the world’s largest Asia-focused investment group, had picked up 61.5 per cent for around Rs 2,366 crore and the price paid today for the 5.3 per cent stake is the same it was sold to them last year.
PAG, a leading Asia-focused investment group, continues to be the majority shareholder with a 55.84 per cent stake. “We bought back 5.28 per cent at the same price of what they paid us last year, and it works out to be close to Rs 230 crore,” he said.
According to the agreement, which was to lapse this month, no premium or discount was involved, Shah said.
With this transaction, the company’s total equity capital has gone up to Rs 1,716 crore. It has closed the first half of the current fiscal with a revenue/fee income of Rs 744 crore and a net revenue of Rs 636 crore and a net profit of Rs 148 crore, of which the group’s share was Rs 57 crore.
In August 2020, PAG had acquired a 61.5 per cent stake in Edelweiss Wealth Management for Rs 2,366 crore, including primary and secondary investment, which also included acquiring the entire ownership of two prior investors — Kora Management and Sanaka Capital taking its stake to 61.5 per cent.
Shah said the topline (revenue) is clipping at 85 per cent on an annualised basis and bottlomline (profit) at still stronger 85 per cent and will close the year with a revenue of Rs 1,500 crore and a bottomline of around Rs 400 crore.
Shah reiterated the group’s plan to demerge the wealth management arm by June 2022 and will unlock the value by taking it public by October next.
Its Rs 1.81-lakh-crore AUM comes from over 7.5 lakh customers. Of them, 2,600 are ultra HNIs (those with under-Rs 500 crore assets and around 100 family offices with over Rs 500 crore assets).
He said Edelweiss’ AUM has been growing at 30 per cent each year since 2018. He hopes to make it one of the largest profit centres for the group and expressed hope that the planned demerger and listing should be value accretive to all stakeholders. It enjoys around eight per cent of the industry.
“With a significant growth runway visible for wealth management, we are excited to invest in this business that has a proven track record and fuel the expansion of its market dominance,” Shah said.
He added that all businesses of the company are well-capitalised and “we look forward to investing in opportunities that exist as the economy emerges out of the pandemic”.
The company’s focus will continue to be on enhancing the value of the franchise and unlocking this value for the shareholders, Shah said.
The wealth management business, including capital markets, provides wealth management services to over 2,600 of the country’s wealthiest families as well as around 7.5 lakh high net-worth individuals and other affluent clients.
The Rs 300-lakh-crore domestic wealth management industry has been rapidly growing and is on an annual growth trajectory of 12.5 per cent annually, to scale Rs 540 lakh crore in the next five years.