OTTAWA: Caisse de dépôt et placement du Québec (CDPQ), one of North America’s largest pension fund managers, announced a long-term partnership agreement with Edelweiss Group on Monday. CDPQ is a Canada-headquartered long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As on June 30, it held $254.9 billion in net assets. As part of the tie-up, the foreign investor will acquire a 20 per cent equity stake in Edelweiss Asset Reconstruction Company (EARC), which has assets totalling Rs. 30,000 crore. The agreement also includes target investments by CDPQ of Rs.5,000 crore over four years that will provide Edelweiss Group with capital to invest in stressed assets and private debt opportunities in India, said a statement jointly released by Edelweiss and CDPQ.
The partnership aims to channel between Rs.12,000 crore and Rs.14,000 crore —including CDPQ’s Rs.5,000 crore and investments from Edelweiss Group and other international institutional investors — into private debt and restructuring of stressed assets in the country, it added. This platform will lead to investment in assets with the aim of restructuring debt and turning around companies, as well as becoming the provider of financing to Indian entrepreneurs and companies. These investments, to be carried out by EARC and through different Edelweiss funds, will result in the purchase of non-performing loans from Indian banks and investments in private debt of growing Indian companies. EARC has recently set up a consulting team providing value-adds and operational improvements to industrial businesses to enhance their productivity and contribution to the Indian economy.
According to the statement, CDPQ aims to further its long-term commitment and actively participate in the growth of this sector as a shareholder of EARC and will sit on EARC’s board of directors and on the Edelweiss Group investment committee overseeing private debt and stressed assets investments. In addition to CDPQ’s proposed 20% stake, the other shareholders in EARC will be a Scandinavian insurance company with a 4% stake, 16% will be held by Indian investors and the balance by the Edelweiss Group. The acquisition and shareholding are subject to standard closing conditions, completion of legal documentation and approval by regulatory authorities, said the statement.
