Edelweiss infrastructure fund marks first close, plans to raise extra $668 mn

Edelweiss Alternative Asset Advisors Ltd has confirmed its infrastructure fund marked its first close of raising money on March 31. Edelweiss Infrastructure Yield Plus Fund, the company said, plans to raise additional $668 million (Rs 4,500 crore) over the next 12 months, having already secured $297 million, or Rs 2,000 crore.

The fund, which aims to buy out operating assets from infrastructure developers, has actively started evaluating opportunities, said fund manager Subahoo Chordia.

The fund counts global pension funds, insurance companies, endowment funds, banks and certain family offices among its investors.

Edelweiss Alternative Asset Advisors, the investment arm of financial services group Edelweiss, manages seven funds catering to global and domestic investors across infrastructure, distressed assets, collateralised credit and real estate. Edelweiss group, which offers asset management and advisory capabilities, currently has Rs 1,63,000 crore of assets under management.

“Over the last couple of years, we have seen a huge uptick in the demand for products offering higher risk-adjusted yield from our investors, and the fund aims to cater to this specific need,” said Nitin Jain, chief executive, global wealth and asset management, Edelweiss Group.

The infrastructure fund launched in mid-December had announced a target corpus of Rs 2,000 crore and a greenshoe option of Rs 4,500 crore. The fund has created two holding companies – one for holding assets of road companies and the other for assets in the transmission and renewable space. It has a 10-year life, with an average holding period of five years and expects a complete deployment in three years. It targets an internal rate of return (IRR) of 18-20% in rupee terms. To give an idea, better-than-average private equity firms strive to clock a dollar IRR of early to late teens in percentage terms. In rupee terms, private equity firms typically chase an IRR of 20-30%.

Edelweiss has also been offered investment partnership by a foreign fund. In October 2016, Caisse de Depot et Placement du Quebec (CDPQ), one of Canada’s largest pension funds, said it would invest $750 million in Indian stressed assets alongside Edelweiss. This investment included buying a 20% stake in Edelweiss Asset Reconstruction Company.

Another key player in infrastructure funds is IDFC Alternatives Ltd, which has recently agreed to divest the infrastructure asset management business to Global Infrastructure Partners (GIP).