ECL Finance Bags Rs1040 Crore from CDPQ
The investment from CDPQ would contribute towards establishing a large and diversified credit platform in India. This proposed investment will close after customary regulatory approvals.
Edelweiss Group on Friday announced that CDPQ Private Equity Asia Pte. Ltd, an arm 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 1800 crore (nearly $250 million) in ECL Finance Limited (ECL Finance), the non-banking financial company (NBFC) arm of Edelweiss Group. The investment from CDPQ would contribute towards establishing a large and diversified credit platform in India. This proposed investment will close after customary regulatory approvals.
Edelweiss Group, over the years, has established a significant competitive position across businesses including the credit segment. With a credit book of around Rs 30,000 crore (nearly $4.2 billion) (Q3FY19) that is spread across wholesale and retail finance segments, the business has both robust size and scalability. 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. It provides thrust to the business for technology and digital investments. This investment would also help ECL Finance to have the required resources to maintain strong organic growth and take advantage of any market consolidation opportunities.
Rashesh Shah, chairman and CEO of Edelweiss Group said that credit penetration in India will be the key to advancing India’s economic gains, driven by the long-term trends in democratisation of credit, rising household incomes and increased consumption. He expects this partnership to deliver tremendous value towards deepening the market and they are encouraged by this investment by CDPQ to partner with them on this journey, he said.
Michael Sabia, President and Chief Executive Officer at Caisse de depot et placement du Quebec, said that they are glad to strengthen and expand their partnership with Edelweiss Group, with whom they share a common mindset and who has one of the most innovative credit investing platforms in India. This new investment capitalizes on solid growth in the financing demand from SMEs and residential sectors, both of which being key drivers in sustaining India’s future growth.
CDPQ’s partnership with the Edelweiss Group started in 2016 with a significant investment in Edelweiss ARC, India’s largest asset reconstruction company.
Deepak Mittal, MD & CEO of ECL Finance said that credit has been their strength and they are well positioned to capitalize on the India opportunity. At this stage of their expansion, they are excited to join hands with CDPQ to fuel their retail lending business across India. Their competitive edge will come from investments in the direct technology platform and next-generation data analytics as they scale across SME, affordable housing, agri-loans and rural finance, he said.
Edelweiss has built a diversified credit book catering to corporate and retail customers. This business has been a major growth driver for the Group, driven by rapid scale-up in retail credit book in the last few years. With an aim to be closer to customers, the business has now expanded to over 180 locations across the country with plans afoot to double this number in the near future. A string of innovative products and services are also lined up for launch in the latter half of the year. This investment and the deep focus on expanding credit to deserving and underserved markets will propel growth in this business for Edelweiss.
