Edelweiss ARC to raise Rs 500 cr via debentures

Edelweiss Asset Reconstruction Company Limited (EARC) is raising Rs 500 crore through debentures to fund business growth.

EARC, the largest player in the distressed credit business, has a capital of Rs 5,133 crore. The assets under management stood at Rs 41,680 crore.  

ICRA has assigned “AA” for the principal protected market-linked debentures. The outlook on the rating is stable. The debentures would have a scheduled tenor of up to 10 years from the deemed date of allotment.  

Coupon amount would be payable on the PP-MLDs on maturity date. They would be backed by a guarantee by Edelweiss Financial Services Limited.

CDPQ, one of North America’s largest pension fund managers, is taking 20 per cent equity stake in Edelweiss Asset Reconstruction Company. CDPQ has already brought in Rs 64 crore as second tranche of equity infusion.

ARC operates wholly in the large corporate segment, perceived to be risky on account of its complexity, higher ticket size, as well as levels of high degree of engagement with promoters and bankers. The Edelweiss Group, through Edelweiss Custodial Services Limited (Ends) along with other group companies, held 74.80 per cent stake as on March 31, 2017, while the remaining stake is held by other investors.

The company reported a net profit of Rs 102 crore in FY17 on an operating income of Rs 249 crore as compared to net profit of Rs 45 crore over an operating income of Rs 163 crore in FY16.