Asia-focused investment group PAG, led by China’s private equity champion Weijian Shan, is investing approximately $300 million (~ Rs 2204 crore) for a 51% stake in Edelweiss Wealth Management (EWM), the second-largest non-bank wealth management business in India. The investment will close in 4-6 months.

As per the deal announcement, PAG will acquire a 51% stake in EWM at a post-money valuation of Rs 4,400 crore. Parent Edelweiss group led by Shah will retain around 37% stake in the wealth group while existing investors Sanaka Capital and US-based Kora Management will own a total of 12%.

This is so far the largest equity raise in Edelweiss Group, which aims to use the proceeds generated from the stake sale to de-leverage balance sheet and for equity investments in other growth businesses. The sale was approved in a board meeting on Thursday.

The intention is to de-merge EWM in the next 12-18 months and list it in due course as a separate entity. All business relationships and synergies with the Edelweiss Group will continue as earlier.

PAG is a leading investor in the Asias’s fast-growing economies and is especially keen on the Indian market, where it expects to invest $1 billion in the next two to three years, said a joint statement.

PAG (PAGAC Ecstasy Pte Ltd and its affiliates) will become a majority owner of the Edelweiss Wealth Management platform (EWM) of Edelweiss Global Investment Advisors.

Do note the deal does not include Edelweiss Asset Management (EAM), which houses mutual funds, alternatives and asset reconstruction platform. They will continue to remain in the control of Shah-led Edelweiss group.

The Wealth Management business, including capital markets, provides wealth management services to over 2,400 of India’s wealthiest families as well as about 600,000 high net-worth individuals and other affluent clients, the statement added. EWM has grown its customer assets under advice of Rs 1.27 trillion in the first quarter of the fiscal year 2021.

As per Edelweiss group’s listed entity stock exchange filings, EWM business in FY20 reported revenue of Rs 1,128 crore, profit after tax of Rs 280 crore, and net worth of Rs 1,275 crore.

Rashesh Shah, Chairman & CEO, Edelweiss Group said, “In PAG we have found a great partner with global experience and strong capabilities…We remain committed to unlocking value for businesses and shareholders alike and remain future-ready to ride the economic trajectory post Covid.”

Weijian Shan, Chairman and CEO, PAG said, “PAG is committed to India’s market as we strongly believe in the long-term growth of the Indian economy. The investment in Edelweiss Wealth marks a milestone in PAG’s investments in the India market.”

Weijian Shan is a Chinese economist, businessman, and author based in Hong Kong. Before PAG, he was a partner of TPG, and co-managing partner of TPG Asia (formerly known as Newbridge Capital). Previously, Shan was a managing director of JP Morgan.

There will be segregation of legal structure of the Edelweiss group relating to wealth management and asset management businesses into two separate business verticals namely Edelweiss Wealth Management (EWM) business and Edelweiss Asset Management (EAM) business respectively.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at [email protected].

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