Edelweiss Alternatives raises $1 billion for third special-situations fund

Bengaluru: Edelweiss Alternative Asset Advisors (EAAA), the alternative-assets arm of Mumbai-based financial services firm Edelweiss Financial Services Ltd, said on Monday it has raised $1 billion (about ₹8,000 crore) for its third special-situations fund. The fund has, so far, invested over 40% of the corpus across eight deals, the alternative-investment firm said in a statement. It hasn't marked its final close yet. Special-situations funds are not designed for long-term investment but are instead a way for businesses to access working capital relatively quickly and easily.

The fund has a target corpus of $1 billion and with a green-shoe option of $500 million. It was launched last October and mopped up $425 million for its first close from global institutional investors, including insurance companies, pension funds, and high-net-worth individuals and family offices in India.

The firm said that the new fund has an active pipeline of deals valued at about $480 million. So far it has invested in sectors such as roads, steel, paper, hotels, leased offices and real estate.

“We expect the private credit market to grow from its current size of $14 billion to $100 billion over the next decade as India doubles its GDP to $7 trillion. As a brand, we will continue to strive to deliver not only superior risk-adjusted returns across our businesses but also focus on providing continuous and consistent yield/income to our clients every year and creating value for all stakeholders while fostering job creation and protection,” said Venkat Ramaswamy, vice chairman at the Edelweiss Group.

Going forward, Edelweiss Alternatives expects some money from offshore investors to be disbursed in Q1 FY24. According to a spokesperson, this fund should raise around the same amount of capital as the previous one.

The second special-situations fund garnered about $1.2 billion when it closed in January 2019. That was the largest fundraise in alternatives in India, with Canadian pension fund CDPQ as one of the key investors. The second fund has deployed over $1.2 billion across 40 transactions and clocked 21 deals, harvesting about $1.5 billion from these transactions, the company said.

On special situations as an investment opportunity, Amit Agarwal, president and head of private credit at Edelweiss Alternatives, said: “Special situation deals are very attractive in the current Indian context as secondary sales of loans continue to be strong, even as most underlying assets are operating well but require solutions to reach sustainable debt levels.”

The fund caters to companies looking for specialized financing solutions to turn around their business, as well as financial institutions looking to sell their portfolio assets.

Edelweiss manages one of the largest alternative investment platforms in India, with around $5.9 billion ( ₹49,000 crore) in assets under management. It says it is focused on providing high-quality credit and yield opportunities to global and domestic professional investors across performing credit (corporate and real estate), special situations and infrastructure yield.