Edelweiss' NBFC arm ECL Finance cracks Rs 1800 crore investment deal with America's largest pension fund manager firm CDPQ
CDPQ has signed an agreement to invest over Rs 1800 crores in ECL Finance Limited, the non-banking financial company arm of Edelweiss Group.
Edelweiss Group announced on Tuesday that CDPQ Private Equity Asia Pte. Ltd., a wholly owned subsidiary of Caisse de dépôt et placement du Québec (“CDPQ”), one of North America’s largest pension fund managers, has signed an agreement to invest over Rs 1800 crores (near $250 million) in ECL Finance Limited (“ECL Finance”), the non-banking financial company (NBFC) arm of Edelweiss Group. The planned investment by CDPQ would contribute towards establishing a large and diversified credit platform in India. This proposed investment will close after customary regulatory approvals.
Speaking on the development, Rashesh Shah, Chairman and CEO of Edelweiss Group said, “Credit penetration in India will be the key to advancing India’s economic gains, driven by the long-term trends in democratisation of credit, rising household incomes and increased consumption. I expect this partnership to deliver tremendous value towards deepening the market and we are encouraged by this investment by CDPQ to partner with us on this journey”.
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Standing in sync with Rashesh Shah; Deepak Mittal, MD & CEO of ECL Finance said, “Credit has been our strength and we are well positioned to capitalise on the India opportunity. At this stage of our expansion, we are excited to join hands with CDPQ to fuel our retail lending business across India. Our competitive edge will come from investments in the direct technology platform and next-generation data analytics as we scale across SME, affordable housing, agri-loans and rural finance”.
Michael Sabia, President and Chief Executive Officer at CDPQ said, “We are glad to strengthen and expand our partnership with Edelweiss Group, with whom we share a common mindset and who has one of the most innovative credit investing platforms in India. This new investment capitalizes on solid growth in the financing demand from SMEs and residential sectors, both of which being key drivers in sustaining India’s future growth”.
Edelweiss Group has built a significant competitive position across businesses including the Credit segment. With a credit book of around Rs 30,000 crores (~US$4.2 billion) (Q3FY19) that is spread across wholesale and retail finance segments, the business has both robust size and scalability. The agreement with CDPQ will enable ECL Finance to capitalize on opportunities in the credit market and confirm the capability of the Group to capture opportunities in the NBFC space. It provides thrust to the business for technology and digital investments. This investment also ensures that ECL Finance has the requisite resources to maintain strong organic growth, as well as take advantage of any market consolidation opportunities.
The CDPQ partnership with the Edelweiss Group began in 2016 with a significant investment in Edelweiss ARC, India’s largest Asset Reconstruction Company.
Edelweiss has built a diversified credit book catering to corporate and retail customers. This business has been a significant growth engine for the Group, driven by rapid scale-up in retail credit book in the last few years. With an aim to be closer to customers, the business has now expanded to over 180 locations across the country with plans afoot to double this number in the near future. A string of innovative products and services are also lined up for launch in the latter half of the year. This investment and the deep focus on expanding credit to deserving and underserved markets will propel growth in this business for Edelweiss.
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