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Euromoney, September 30 2020

Edelweiss has grown over 25 years into an independent and successful diversified financial services group, but it needs capital. Its decision to sell a controlling stake in its wealth management business spotlights the institution and the potential of the sector.

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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Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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