Edelweiss plans to set up asset reconstruction unit

Financial services firm Edelweiss Capital Ltd plans to set up an asset reconstruction firm and apply for regulatory approval in the next six months, a top official said on Friday.

Asset reconstruction firms buy bad loans in a pool format at a discount and recover the money from the borrowers subsequently. Loan growth of nearly 30 percent in India over the past few years has resulted in creation of non-performing assets, an opportunity which is luring several state-run and private sector banks as well as financial institutions.

Under the deal, Edelweiss would offer advisory services on wealth management products to customers of the bank with an average net worth of over 1 million rupees each, Shah said. Several banks such as ICICI Bank, HDFC Bank , ABN Amro and Kotak Mahindra Bank have increased their focus on wealth management as wealthy Indians demand specialised advisory services.

HDFC AMC hikes stake in Biocon to 5.15%

HDFC Asset Management Company (AMC) has hiked its stake in Biocon, a Bangalore-based biotech company.The company in a release to NSE, said it has hiked its stake to 5.15% from existing 4.97% through market purchase from Edelweiss Securities executed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

The HDFC Mutual Fund comprising of HDFC Capital Builder Fund, HDFC Equity Fund, HDFC Children's Gift Fund - Investment Plan, HDFC Growth Fund, HDFC Top 200 Fund, HDFC Long Term Advantage Fund, HDFC TaxSaver, HDFC Core & Satellite Fund, HDFC Premier Multi-Cap Fund, and HDFC Long Term Equity Fund has made investments in Biocon.

Lehman picks 26% in Edelweiss` NBFC

The New York-headquartered Lehman Brothers has picked up 26 per cent stake in ECL Finance, the non-banking finance company of Edelweiss Capital, for close to Rs 180 crore.The acquisition comes within days after Lehman Brothers bought the institutional broking business of Brics Securities, a Mumbai-based broking house.

In March, the Mumbai-based financial services company Edelweiss announced its foray into the non-banking financial space and asset management by investing a total of Rs 400 crore in the new ventures.The NBFC would be looking at mortgage business and other credit instruments.

Last week, Edelweiss filed a prospectus with the capital market regulator, the Securities and Exchange Board of India (Sebi), for its initial public offering. The company will be offering 8.3 million equity shares of Rs 5 each and the post issue dilution is 10.92 per cent.A portion of the proceeds of the issue will be used to buy office space of about 30,000 sq ft either for ECL Finance or for Edelweiss Securities.

Read more in The Business Standard article.

PE funds target small firms

Private equity (PE) funds floated by Indian brokerages are making big inroads into the world of smaller companies as bigger PEs stay away from them.

Brokerages such as Motilal Oswal, Religare, JM Financial, Edelweiss, Anand Rathi Securities, IDBI Capital Markets, which together manage over Rs 2,600 crore, are seeing opportunities in the small-cap space, providing the much-needed expansion capital to entrepreneurs, who otherwise find it tough to raise funds to meet their capital requirements.

IDBI Capital Market Services, the broking and financial subsidiary of IDBI, launched a Rs 50 crore private equity fund aimed at funding small and mid-sized companies. The company along with other PEs such as Sidbi Ventures have invested in GSPC Gas, a subsidiary of Gujarat State Petroleum Corporation.

Read more in The Business Standard article.

Citigroup Venture to buy 19.9% stake in Anand Rathi

Leading private equity investor Citigroup Venture Capital International is picking a 19.9% stake in Anand Rathi Securities (ARS), a Mumbai-based stock brokerage promoted by former BSE president Anand Rathi.

While announcing the deal on Friday, ARS said the funds will be utilised for the expansion purpose and also for meeting working capital requirements. The company, however, did not disclose the size of the deal and the price at which the stake is being acquired by the US-based fund.

In the past few years, many Indian brokerages have raised funds through the PE route, which has mainly gone into expansion of their businesses. Motilal Oswal Securities, India Infoline, Edelweiss Securities, IL&FS Investsmart and Indiabulls Financial Services are among the brokers which roped in foreign investors when the market was bullish.

Read more in The Economic Times article.