US-based private equity firms Blackstone Group and Bain Capital are in advanced discussions with promoters Edelweiss Financial Services Ltd for buying a majority stake in Edelweiss Global Investment Advisers (EGIA), which houses the group’s wealth management, mutual fund, life insurance, general insurance and investment banking businesses.
Two persons directly aware of the development confirmed this.
“Since EGIA houses most of the large businesses of the group, both Blackstone and Bain are keen to buy all businesses under EGIA except the asset reconstruction business,” said the first person, adding that the shortlisted buyer will make an offer to acquire 75% in EGIA as per the deal terms.
Apart from asset reconstruction, there is also a question mark over the insurance companies as well since a foreign insurance company is a shareholder in the life insurance business. EGIA’s potential buyer may also acquire a majority stake in EFSL’s two insurance businesses, though the structure is yet to be finalised.
Incidentally, Edelweiss has been looking to shed assets for a while now, especially the wealth management business.
Edelweiss’ wealth management subsidiary is primarily engaged in managing the wealth of the low and mid-level affluent households, with a modest ₹1 lakh corpus as the minimum eligibility ticket. This company currently manages ₹1.2 trillion worth of wealth, according to an Edelweiss report.
Edelweiss Mutual Fund, through 38 schemes, had average assets of ₹23,614.37 crore under management for the June quarter as compared to ₹24,466.11 crore in the March quarter. In 2016, Edelweiss Asset Management had acquired the domestic mutual fund business of JP Morgan Asset Management India Pvt. Ltd, which then had assets under management (AUM) of ₹7081 crore.
In the insurance business, EFSL has 51% in Edelweiss Tokio Life Insurance Co. Ltd. and 100% in Edelweiss General Insurance Co. Ltd.