Our PEs stick for quite a while: Edelweiss chief

Fidelity Investment Trust picked up 2.07%, with the remainder bought by others in the market. Fidelity now holds 3.9% stake in Edelweiss

Rashesh Shah, chairman and chief executive of the Edelweiss Group, says most private equity (PE) investors in it have remained for the long term.

He said so a day after the Government of Singapore Investment Corporation Pte (GIC) sold further stake in Edelweiss Financial Services. It was done through Caladium Investment Pte (a wholly owned subsidiary of GIC. It offloaded stake worth Rs 128 crore (2.25 per cent) in Edelweiss Financial Services on Tuesday, according to exchange data.

Fidelity Investment Trust picked up 2.07 per cent, with the remainder bought by others in the market. Fidelity now holds 3.9 per cent stake in Edelweiss.

"GIC, Greater Pacific and Sequoia are PE investors who had come before the Initial Public Offer (IPO). Usually, most of these PE guys have a horizon of five to seven years. Greater Pacific Capital invested in 2005; they sold in 2014 - nine years is very long. Similarly, GIC came in 2006 and they have already spent eight years," said Shah.

He added: "It is always good for a company to have investors who come in early, then get out and new investors come in, so that there is some churn and liquidity improves in the market. Most of our investors have been for the long term."

GIC had originally jointly invested with Shuaa Capital in December 2006. Later, it also bought some stake held by Greater Pacific Capital.

After the IPO of Edelweiss in 2007, GIC was the single largest institutional shareholder. Eventually, Carlyle bought stake in the company through secondary market purchases over the past few years. As of December 2014, Carlyle held 8.6 per cent stake in Edelweiss; Shah holds 28 per cent stake. Sequoia Capital exited in 2014.

GIC is in the process of exiting the company. Last month, it had parted ways with a 1.65 per cent stake in Edelweiss, bought by Rashesh Shah. With Tuesday's stake sale, GIC holds four per cent.

"This is how it works. After eight years, they (GIC) have made fairly good returns. GIC held about six per cent until yesterday. Initially, they had eight per cent," said Shah.

Edelweiss Financial Services' shares closed at Rs 72.25 on the BSE exchange, down 5.3 per cent compared to Tuesday's. The stock had hit a 52-week high at Rs 82.25 during Tuesday's trade.

It had reported a 43 per cent growth in consolidated net profit for the quarter ended December 2014, at Rs 83 crore, driven by growth in fee income and credit. Fee and commission income was Rs 160 crore, up 85 per cent from the same quarter a year before. The total credit book at the end of the quarter was Rs 11,178 crore, up 38 per cent from the December 2013 quarter.