Edelweiss arm aims to raise USD 1 bn in third distressed asset fund

Edelweiss Alternative on Tuesday said it is targeting to raise USD 1 billion (about Rs 8,000 crore) in its third distressed asset fund, eyeing strong opportunities in the space.

The company has already raised USD 425 million or Rs 3,400 crore for the third ‘Special Situations Fund’ (SSF III) from large insurance companies and pension funds globally, as also domestic high net individuals and family offices, it said in a statement. Under an SSF, the company focusses on asset heavy companies and identifies viable underlying businesses that have a strong turnaround potential, or invest in situations where resolution of asset requires capital and domain expertise, it said.

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In the second fund launched in 2018, it invested Rs 10,500 crore and realised cash of more than Rs 9,500 crore from the portfolio companies, it said. Under the latest fund, it is targeting to raise USD 1 billion with a greenshoe option of USD 500 million, the statement said. Of the Rs 3,400 crore raised till now for the third SSF, it has already invested Rs 1,000 crore in two special situation opportunities, and said there is a strong pipeline of opportunities in the space.

Special situation opportunities provide an exciting avenue for generating superior risk adjusted returns for investors, Edelweiss Alternative head for special situation strategy, Amit Agarwal, said. He added that the strategy caters to both corporates looking for specialized financing solutions to turnaround their business fortunes and also financial institutions looking to sell or resolve their existing portfolio assets.

Acquisition financing under bankruptcy process is also emerging as a good opportunity set, he said, adding that investors can generate high returns, akin to equity, while mitigating downside risk as large part of fund investments that are made in the nature of covenant-heavy credit instruments. The company statement claimed Edelweiss Alternative Asset Advisors pioneered private debt in India with the launch of a USD 230 million (Rs 1,000 crore then) fund in 2010, and has USD 5 billion or Rs 40,000 crore of assets under management now.