The sale could happen through a combination of primary capital infusion or a secondary stake sale or a combination of both
Blackstone, TPG, KKR, Carlyle, Apax Partners, among others are in talks to acquire about 20-25 percent stake in Edelweiss' Global Wealth and Asset Management (GWAM) business, The Economic Times reports.
Edelweiss' GWAM business comprises wealth and asset management, asset reconstruction and credit funds businesses and is valued at Rs 12,000-15,000 crore. A deal is expected to be reached in January.
The sale could happen through a combination of primary capital infusion or a secondary stake sale or a combination of both, the report said.
Moneycontrol could not independently verify the report.
Edelweiss Financial Services, the main holding company, has three main businesses: credit, franchise and advisory and insurance. As of now, its insurance and credit companies are separate but if the deal comes through, a new entity may emerge, in which Edelweiss may hold a majority stake, the report said.
The interest shown by these firms comes at a time when the non-banking financial services (NBFCs) industry is facing a liquidity crunch, triggered by a series of default by Infrastructure Leasing & Financial Services (IL&FS). Banks and mutual funds (MFs) have also been restricting lending due to fears of bad debt and defaults.
According to the report, Edelweiss has also cut back lending to some sections of the company even though it has been able to raise money for its needs.
Edelweiss' wealth management business is one of the fastest growing players in the industry, reporting a compounded growth rate of 62 percent since FY12. Its alternative assets business has grown 10 times since FY15 and is now worth Rs 20,000 crore. The company has assets under management (AUM) of Rs 96,000 crore, the report said.
"Wealth management is one of the core sectors where PE funds are very much keen on. The successful investments made by PE funds in firms such as IIFL Wealth and ASK Group also increased demand for the sector," a Mumbai-based investment banker told the paper.
In 2015, global private equity firm General Atlantic Singapore Fund acquired a 21.61 percent stake in IIFL Wealth Management for an estimated Rs 1,122 crore. In June, investors including General Atlantic, Ward Ferry Management, Amansa Capital and Steadview Capital bought another 5 percent stake in IIFL Wealth for Rs 746 crore.
US-based private equity firm Advent International also entered into the wealth management space in India in December 2016 after picking up about 40 percent stake in ASK Group for around $130 million.The financial services sector garnered the highest share of private equity/venture capital (PE/VC) investments in the first half of this year, with $4.2 billion invested across 74 deals, the highest ever half-yearly PE/VC investment into the sector, according to the latest EY-IVCA report.