In late August, Hong Kong-based private-equity firm Pacific Alliance Group (PAG) cemented a Rs22 billion ($300 million) investment to take a majority stake in Edelweiss Wealth Management, one of India’s leading specialist financial services operators.
For PAG, it was a strong statement in a market where it says it expects to invest $1 billion in the next two to three years; for Edelweiss, it was a welcome capital influx to allow it to grow not only wealth but also a clutch of other businesses that were not on the block in the PAG sale.
“This is a very transformative transaction for us,” says Rashesh Shah, chairman and chief executive of Edelweiss Group. “We have always been very keen that Edelweiss is built as a diversified financial services firm. We have wholesale credit, retail credit, asset management, wealth management, insurance. There are a lot of parts.”
The sale of the controlling stake in the wealth business allows those businesses – including the non-banking financial company arm whose wholesale loans business has been hit by Covid-19 provisions – to receive funds to grow. “This is the first time we are planning to demerge a business and list it separately,” he says. “Most company management don’t like to spin off businesses. It reduces your span of control.”
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