Edelweiss Wealth Management, among the top-three private wealth managers with ₹1.81 lakh crore of assets under management, has bought back 5.28% of its shares from the partner PAG by paying ₹230 crore, thus increasing the stake to 44.16%.
Edelweiss Group chairman and CEO Rashesh Shah told PTI that the transaction is as per the agreement signed in August 2020 when PAG, which is the world’s largest Asia-focused investment group, had picked up 61.5% for around ₹2,366 crore and the price paid today for the 5.3% stake is the same it was sold to them last year.
PAG, a leading Asia-focused investment group, continues to be the majority shareholder with a 55.84% stake. “We bought back 5.28% at the same price of what they paid us last year, and it works out to be close to ₹230 crore,” he said.
According to the agreement, which was to lapse this month, no premium or discount was involved, Shah said.
With this transaction, the company’s total equity capital has gone up to ₹1,716 crore. It has closed the first half of the current fiscal with a revenue/fee income of ₹744 crore and a net revenue of ₹636 crore and a net profit of ₹148 crore, of which the group’s share was ₹57 crore.
In August 2020, PAG had acquired a 61.5% stake in Edelweiss Wealth Management for ₹2,366 crore, including primary and secondary investment, which also included acquiring the entire ownership of two prior investors — Kora Management and Sanaka Capital taking its stake to 61.5%.
Shah said the topline (revenue) is clipping at 85% on an annualised basis and bottlomline (profit) at still stronger 85% and will close the year with a revenue of ₹1,500 crore and a bottomline of around ₹400 crore.
Shah reiterated the group’s plan to demerge the wealth management arm by June 2022 and will unlock the value by taking it public by October next.
Its ₹1.81-lakh-crore AUM comes from over 7.5 lakh customers. Of them, 2,600 are ultra HNIs (those with under- ₹500 crore assets and around 100 family offices with over ₹500 crore assets).
He said Edelweiss’ AUM has been growing at 30% each year since 2018. He hopes to make it one of the largest profit centres for the group and expressed hope that the planned demerger and listing should be value accretive to all stakeholders. It enjoys around 8% of the industry.
“With a significant growth runway visible for wealth management, we are excited to invest in this business that has a proven track record and fuel the expansion of its market dominance,” Shah said.
He added that all businesses of the company are well-capitalised and “we look forward to investing in opportunities that exist as the economy emerges out of the pandemic”.
The company’s focus will continue to be on enhancing the value of the franchise and unlocking this value for the shareholders, Shah said.
The wealth management business, including capital markets, provides wealth management services to over 2,600 of the country’s wealthiest families as well as around 7.5 lakh high net-worth individuals and other affluent clients.
The ₹300-lakh-crore domestic wealth management industry has been rapidly growing and is on an annual growth trajectory of 12.5% annually, to scale ₹540 lakh crore in the next five years.
Source: Mint