Edelweiss raises Rs 6,600 crore AIF, plans to raise $1 billion fund for realty sector next year

Edelweiss Group on Monday said its asset management arm has raised Rs 6,600 crore from global long term investors for on-lending to Indian companies and projects requiring long term capital.

The arm is looking to raise an alternative investment fund (AIF) of over $1 billion next year to invest in realty assets.

Group chairman Rashesh Shah claimed its $890 million is the largest fund raise this year by any entity in India amid the severe economic impact of the pandemic, and will be deployed into projects and companies seeking long term funds which can’t be served by the banks or the NBFCs due to potential asset liability mismatches.

Edelweiss Asset Management’s (EAM) president and head Hemant Daga said the platform is targeting the seven-year Edelweiss Special Opportunities Fund-III (ESOF) to deliver returns between 16-18 percent per year, which is a notch higher than the two previous funds in the same series.

He said EAM, which manages over Rs 30,000 crore, has managed to get commitments from global long term investors like pension funds and insurance companies for the new fund.

Shah explained that there are some concerns in the minds of investors from a short term of up to one year, but they’re very bullish on the long term in the country.

Daga said this will be a sector-agnostic fund and EAM will target to commit up to 35 percent of the $890 million in the next 12 months.

He said the mandate of the fund is to provide flexible growth capital for mid-market companies which may include giving funds for acquisitions and stake enhancements as well.

EAM will focus on governance, cash flows, counterparty risks and collateral while lending the money, he said, adding that any company or project meeting the expectations on the above can get the debt.

The overall need for funds in the market in which ESOF-III will be operating was pegged at over Rs 40,000 crore by Daga.

He said EAM has a dry powder of over Rs 15,000 crore across all funds waiting to be deployed right now.

Daga said next year, EAM, which has funds including those investing in distressed assets and mutual funds, will be raising a $1 billion fund focused on real estate.

This fund will be targeting last-mile funding requirements for residential projects all across the country, Daga said, claiming that fortunes of the real estate sector are also on the upswing after the initial impact.

Shah said the next six months may be somewhat difficult for the Indian economy as it comes out of the pandemic’s impact, but exuded confidence that calendar year 2021 will be very good.