Canadian pension fund picks up 20% in Edelweiss ARC -:- Equity Research

North America's largest pension fund managers Caisse de depot et placement du Quebec (CDPQ) and Edelweiss Group signed a long-term agreement to invest USD 600-700 million (Rs 5,000 crore) over the next four years in stressed assets and private debt opportunities here. Under the agreement, CDPQ, which already pumped in around USD 1.5 billion in various domestic companies, will be acquiring a 20 percent stake in Edelweiss Asset Reconstruction Company, which is the largest in the space with around Rs 30,000 crore of assets under management. "Across our whole organisation, one of our top priorities is India as it has growth potential and strong fundamentals. Today, we are making an initial commitment of USD 300 million to this partnership," CDPQ president and chief executive Michael Sabia told reporters here today. "Our goal is to keep growing our relationship and to do that we are ready to invest between USD 600-700 million over the next four years. In other words, roughly double the initial commitment that we are announcing today," he added. Sabia said his fund sees two big opportunities in this partnership. "First, by expanding credit opportunities, access to credit for Indian companies and by building with Edelweiss, a large and a growing platform to take on an important work of asset reconstruction," Sabia said. Edelweiss Group chairman Rashesh Shah said: "We collectively aim to channelise Rs 12,000-14,000 crore, which includes Rs 5,000 crore from CDPQ over the next four years and investments from us and other institutional investors into the private debt and restructuring of stressed assets." He said as part of this partnership, CDPQ will be acquiring a 20 percent stake in Edelweiss ARC. But he did not disclose the value of the 20 percent equity sale to the Canadian fund. In addition to CDPQ's proposed 20 percent stake, other shareholders in Edelweiss ARC will be a Scandinavian insurance company with a 4 percent stake, 16 percent by domestic investors and the balance by the Edelweiss Group. The acquisition and shareholding are subject to approval by regulatory authorities. Sabia said CDPQ had in the past invested in Indian companies somewhere around USD 1.5 billion and is further looking at buying equity stake in more companies.