Edelweiss Group and PAG seal partnership
Edelweiss Group and PAG have announced a USD 325 million investment by PAG’s private equity strategy in Edelweiss Wealth Management.
PAG has made an investment of ~USD 325 million in Edelweiss Wealth Management (EWM), including primary and secondary investment. In addition, PAG is also acquiring the entire ownership of the prior investors in EWM, Kora Management (Kora) and Sanaka Capital (Sanaka), taking its stake to ~61.5%. Edelweiss will continue to hold ~38.5% stake in EWM as earlier envisaged, with the option to increase it further to up to ~44%.
PAG’s primary capital infusion into the wealth business will further strengthen the equity base and provide growth capital. PAG and Edelweiss will work together towards demerger and the eventual listing of the business, paving way for unlocking value.
Speaking on the development, Rashesh Shah, Chairman & CEO, Edelweiss Group said, “The partnership with PAG is a strong endorsement of the quality of businesses we have built to scale over the years. Our focus will continue to be on enhancing the value of the franchise while simultaneously exploring avenues to unlock this value for the shareholders.
Nikhil Srivastava, Partner and Managing Director, Head of India Private Equity, PAG said, “EWM is one of India's leading wealth management companies with products and services that are highly regarded by customers. We look forward to leveraging PAG’s global experience to drive innovation and transformation to further strengthen EWM's market position and create long-term value for all stakeholders.”
The USD 4 trillion Indian wealth management industry has been expanding rapidly at a five-year CAGR of 11.3%. With a strong estimated growth trajectory of 12.5% per year going forward, it is expected to reach US$7.5 trillion in the next five years, presenting a large opportunity space for EWM.
EWM, which reported Revenues of ~USD 121 million and Profit after Tax of ~USD 25 million for 9MFY21, comprises the wealth management and capital markets business. It is one of India’s largest wealth management platforms, servicing over 2,400 of India’s wealthiest families as well as ~670,000 affluent and high net-worth individuals. It has consistently outpaced the market while making rapid strides in industry rankings as is evident in the customer assets under advice that now amount to US$20 billion, growing with a 43% CAGR from just USD 2.5 billion around 6 years ago in 2015. The capital markets and advisory practice has led marquee transactions over the years.
PAG is a leading private equity investor in Asia’s fast-growing economies and is especially keen on the Indian market, where it expects to invest more than USD 1 billion in total over the next two to three years.
Nitin Jain, MD & CEO, Edelweiss Wealth Management. added “With a significant growth runway visible for Wealth Management in India, we are excited to expand our market dominance with a great partner like PAG. With PAG’s global know-how and strategic guidance, we look forward to a transformative journey ahead.”
The partnership with PAG also reinforces Edelweiss Group’s track record of nurturing and scaling businesses to create long-term value. At the same time, it also provides the Group with growth capital as it continues to take them to the next trajectory of growth. The focus will be on strengthening the leadership position in businesses like Alternatives Asset Management and Asset Reconstruction while further enhancing the retail expansion through Housing Credit, SME Credit, Life & General Insurance and Mutual Funds.