Edelweiss group’s subsidiary ECL finance Ltd. has announced that the company will receive Rs. 1,800 crores (approx 250 million US dollars) by Canadian pension fund CDPQ. The fund infusion comes during the phase where weaker non-bank lenders are facing credit gnaw triggered by IL&FS crisis.
According to the Edelweiss’ statement, the money will come in three different stages; 150 million dollars on deal closure, 50 million at the end of the year one and the remaining 50 million at the end of year two. The money will be converted into equity in 24 to 60 months. In return, CDPQ will have standard governance rights and two board seats in ECL finance.
As part of the transaction, Edelweiss Housing Finance Ltd. will become a subsidiary of ECL Finance and Edelweiss Retail Finance Ltd. will be merged with ECL Finance. With this partnership, the company aims to build a strong credit portfolio, with an increasing focus on the retail segment.
CDPQ already owns a 20 per cent stake in Edelweiss Asset Reconstruction Company Ltd., 1.5 per cent in the listed holding company and investments in Edelweiss group’s alternative investment funds.
“I expect this partnership to deliver tremendous value towards deepening the market and we are encouraged by this investment by CDPQ,” Rashesh Shah, chief executive officer of Edelweiss Group, said in the statement.