Edelweiss Group announced on Wednesday that US-based Kora Management, an investment firm focused on the financial and technology sectors across emerging markets, and an existing long-term investor in Edelweiss, will be investing up to $125 million in the group.
Kora Management has committed to invest $75 million in the advisory business, Edelweiss Global Investment Advisors (EGIA) subject to structuring-related milestones. EGIA includes the businesses of asset reconstruction, wealth & asset management and institutional client group, together contributing to nearly 50% of the Group's profits. Edelweiss is also in talks with investors to join the first external investment round in EGIA, which will be limited to $200 million.
In addition to the $75 million investment in EGIA, Kora also plans to make a further investment of $50 million in Edelweiss. The timing and structure of the transaction is being finalised.
Rashesh Shah, chairman and CEO of Edelweiss Group, said Kora Management is directly aligned with the strategic goals of the business. "Our plan is to raise about $200 million in the advisory business. We are in discussion with 3-4 investors. Kora is an anchor investor for this round and with Kora and other investors, in the next three months, we are hoping that we will complete the $200-million capital raise for the advisory business. We had announced a $250-million capital raise in the credit business three months ago. So with this capital raise, our overall equity of the group becomes much stronger. Our endeavour in next three quarters will be to strengthen our balance sheet, focus on managing liquidity, making sure our asset quality is under quality and strengthen the organisation," he said.
Edelweiss Group had initiated strategic growth plans in 2017 to separate its three businesses - credit, advisory and insurance - into distinct entities based on synergistic business needs, aligned consumer segments and complementary platforms.
Edelweiss said each business group will have its own set of investors, a ring-fenced capital base and an independent board. "The credit and life insurance businesses have already established long term partnerships with a strategic investment of $ 250 million by CDPQ in the former and Tokio Marine's 49% holding in the latter. Kora Management's proposed investment will initiate the third and final process for the advisory business," Edelweiss stated.
In recent years, the Edelweiss Group has partnered with many global institutions including Caisse de depot et placement du Quebec (CDPQ), Allianz Investment Management, Bank of Singapore and Arthur J Gallagher.