Canadian pension fund CDPQ to invest Rs 5,000 cr in Edelweiss ARC

To invest about Rs 5,000 crore over four years in stressed assets and specialised corporate credit in India

Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) will pick up a 20 per cent stake in Edelweiss Asset Reconstruction Company (ARC). It will also invest about Rs 5,000 crore over four years in stressed assets and specialised corporate credit in India.

Reacting positively to the news, the Edelweiss Financial Services scrip closed 8.5 per cent higher at Rs 122.9 a share on the BSE on Monday. Edelweiss ARC had become a subsidiary of Edelweiss Financial Services in the September 2016 quarter.

According to the agreement between Edelweiss and CDPQ, Rs 12,000-14,000 crore would be channelled into private debt and for restructuring of stressed assets in the country. This includes CDPQ’s Rs 5,000 crore and investments from Edelweiss Group and other international institutional investors.

“CDPQ will sit on Edelweiss ARC’s board of directors and on the Edelweiss Group investment committee overseeing private debt and stressed assets investments,” said Edelweiss ARC.

The acquisition and shareholding are subject to standard closing conditions, completion of legal documentation and approval by regulatory authorities. The process is expected to be completed in 90 days.

One of North America’s largest pension fund managers, CDPQ opened CDPQ India, its New Delhi-based office, in March 2016.

The partnership creates one of the largest and most diversified credit investing platforms in India.

Rashesh Shah, chairman and CEO of Edelweiss Group, said: “Recent reforms such as the Bankruptcy Act have the potential to transform the pace of reconstruction and resolution in India’s stressed and distressed market, thus creating a much larger opportunity.”

“By becoming a partner of Edelweiss, CDPQ is looking to support its growth for many years to come. It will participate in the emergence of new innovative and successful businesses in India,” said Michael Sabia, president and CEO at CDPQ.

CDPQ’s investment into Indian listed companies is $1.5 billion.