Edelweiss Financial climbs 12% after North American fund manager CDPQ to invest $250 mn in NBFC arm

Edelweiss Financial Services shares rallied more than 12 percent in morning on Wednesday after North American fund manager CDPQ signed deal to invest $250 mn in the company's NBFC subsidiary.

The stock was quoting at Rs 167.70, up Rs 13.90, or 9.04 percent on the BSE, at 09:29 hours IST.

Edelweiss Group on Tuesday said CDPQ Private Equity Asia Pte Ltd, a wholly owned subsidiary of Caisse de dépôt et placement du Québec (CDPQ), one of North America's largest pension fund managers, has signed an agreement to invest over Rs 1,800 crore (approximately $250 million) in ECL Finance, the non-banking financial company (NBFC) arm of Edelweiss Group," the company said in its filing.

The planned investment by CDPQ would contribute towards establishing a large and diversified credit platform in India, and this proposed investment will close after customary regulatory approvals, it added.

related news Wipro rallies 5% after stock adjusts for bonus issue Bharat Forge falls 2% on sharp fall in North America Class 8 truck orders D-Street Buzz: Nifty PSU Bank outperforms led by SBI; Wipro jumps 3%, DHFL zooms

Edelweiss Group has a credit book of around Rs 30,000 crore at the end of December 2018, which is spread across wholesale and retail finance segments.

"The agreement with CDPQ will enable ECL Finance to capitalize on opportunities in the credit market and confirm the capability of the Group to capture opportunities in the NBFC space," Edelweiss said.

The CDPQ partnership with the Edelweiss Group began in 2016 with a significant investment in Edelweiss ARC, the asset reconstruction company.

While maintaining buy rating with a price target at Rs 205, global brokerage house Citi said CDPQ deal is positive for capital adequacy but might not immediately help liquidity.

Proposed equity infusion by CDPQ is 3 percent of risk weighted assets of Rs 58,000 crore of the company, it added.

According to the brokerage, CDPQ deal can give support at a time when real estate lending is not in favour.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions. First Published on Mar 6, 2019 09:43 am