Mumbai: EdelweissNSE 6.11 % Financials’ stock surged 6 per cent a day after its NBFC arm ECL Finance signed a $250 million convertible equity deal with Canadian fund managers CDPQ in the first equity deal done by an NBFC since the September slowdown. Edelweiss Financials shares closed at Rs 64.5 on the BSE on Wednesday.
Investment by CDPQ (Caisse de dépôt et placement du Québec) would be in three tranches and the first investment of $150 million will be converted into equity shares afte ..
The deal has a performance link structure, so depending on the performance of the company, the stake can go up or down between 13 per cent and 19 per cent, people aware of the matter said. This would value the company at a minimum of Rs 9,500 crore which could go beyond Rs 13,000 crore.
The investment comes at a time when many NBFCs were struggling to raise funds due to higher lending costs by banks and mutual funds after IL&FS defaulted last year. Many of the NBFCs had taken the cheaper commercial paper route to control their assetliability mismatch.
“The market will view this deal positively for sure, since there is one less NBFC to worry about,” said Digat Haria, VP research, Antique Stock Broking.
“The market will view this deal positively for sure, since there is one less NBFC to worry about,” said Digat Haria, VP research, Antique Stock Broking.
ECL Finance has a capital adequacy of about 17 per cent and said that the funds raised will be used to increase growth. “Edelweiss has slightly higher leverage in its NBFC business. Hence, this equity money will help to reduce leverage and improve access to bond market funding,” said Haria.
Investment by CDPQ (Caisse de dépôt et placement du Québec) would be in three tranches and the first investment of $150 million will be converted into equity shares afte ..
The deal has a performance link structure, so depending on the performance of the company, the stake can go up or down between 13 per cent and 19 per cent, people aware of the matter said. This would value the company at a minimum of Rs 9,500 crore which could go beyond Rs 13,000 crore.
The investment comes at a time when many NBFCs were struggling to raise funds due to higher lending costs by banks and mutual funds after IL&FS defaulted last year. Many of the NBFCs had taken the cheaper commercial paper route to control their assetliability mismatch.
“The market will view this deal positively for sure, since there is one less NBFC to worry about,” said Digat Haria, VP research, Antique Stock Broking.
“The market will view this deal positively for sure, since there is one less NBFC to worry about,” said Digat Haria, VP research, Antique Stock Broking.
ECL Finance has a capital adequacy of about 17 per cent and said that the funds raised will be used to increase growth. “Edelweiss has slightly higher leverage in its NBFC business. Hence, this equity money will help to reduce leverage and improve access to bond market funding,” said Haria.
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