Canada’s second-biggest pension fund Caisse de dépôt et placement du Québec said on Monday it had partnered with Indian financial services firm Edelweiss Group to invest up to US$700 million over the next four years in stressed assets and private debt opportunities in India.
Under the deal, Caisse plans to take a 20 percent stake in Edelweiss Asset Reconstruction Co (EARC), a key unit that purchases bad loans and has about US$4.5 billion in assets under management. It would also sit on EARC’s board and the committee that oversees investments.
The firms did not disclose financial terms for the stake sale.
The Canadian pension fund is the latest to strike such a deal in India, where banks have been ordered to clean up an estimated US$120 billion of bad and troubled loans.
India’s biggest private sector lender ICICI Bank Ltd (ICBK.NS) announced a similar tie-up with private equity firm Apollo Global Management LLC (APO.N) in August. That followed a deal between Canada’s Brookfield Asset Management Inc (BAMa.TO) and the State Bank of India (SBI.NS) in July to set up an asset reconstruction company in India to buy into troubled loans held by banks.
Caisse and EARC plan to be involved with restructuring debt as well as provide financing to Indian entrepreneurs and companies.
The Canadian pension fund is also in active talks to take stakes in other Indian companies, focusing on the renewable energy, real estate, logistics and power sectors, Caisse Chief Executive Michael Sabia told a news conference in Mumbai.
Together with other investors, the partnership aims to invest between 120 billion rupees to 140 billion rupees (US$1.8 billion to US$2.1 billion) in private debt and the restructuring of stressed assets in the country, they said in a statement.
Caisse earlier this year opened its first Indian office in New Delhi to scout for investments in South Asia, and said in March it was committed to investing US$150 million in renewable energy in India.
Update: In March 2016, Canada Pension Plan Investment Board signed an agreement with Kotak Mahindra Group to invest up to US$525 million in stressed assets in India’s banking and corporate sectors.
(Reporting by Zeba Siddiqui and Devidutta Tripathy in Mumbai; Editing by Edwina Gibbs)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters