This is not a well-known story, so it bears telling. Five years back, in 2013, a global real estate fund decided to shut shop. Its partners, though, decided to stick around. With a plan to raise a Rs 300-crore ($42.8 million) residential fund. Over the next two years, they met investors across New York, Hong Kong, and Singapore, but capital never found its way. They didn’t give up easy. Kept at it for a good two years, before realising that it wouldn’t work out and it was best to shut shop. In 2015, they went back to traditional jobs, managing a fund, whatever was on offer; their entrepreneurial turn scuppered.
It was true back then. It is true today. Raising capital isn’t easy. For you, me, companies, and it’s no different for private equity funds too.
Sample this: According to Preqin, a research firm which collates data on private equity funds, 20 funds have managed to raise $1.7 billion since January this year. Last year alone, Indian general partners (GPs) managed to raise $3.6 billion across 35 funds. General Partners are fund managers who manage capital.
Money isn’t easy to come by. Which is why Edelweiss Financial Services sticks out. Starkly.
Here are all the things that Edelweiss has going for it at the moment:
- Edelweiss Alternative Asset Advisors Ltd (EAAA), the alternate asset arm of the company has been raising capital across strategies. Its asset under management (AUM) for its alternative assets business stands at Rs 20,100 crore ($2.87 billion) at the end of Q1FY19. This is close to double of what it was at the same time last year—Rs 11,800 crore ($1.68 billion). To be clear, 34% of Edelweiss’ AUM under this business comes from multi-strategy funds and portfolio management services (PMS).
- Its alternatives funds include residential real estate, commercial real estate, infrastructure yield fund, distressed asset fund, structured debt and a pre-IPO fund. And by the end of September, it is looking to raise further capital in all of its existing funds. It had earlier launched a venture capital fund of Rs 300 crore ($43 million) which was funded by Edelweiss’ balance sheet. Currently, it is not looking to raise any capital under the same.
- Edelweiss is new to pure play private equity. It launched its first PE fund in 2017—its private investment in public equity (PIPE) fund. A PIPE fund invests in a listed company at an agreed price rather than directly through market transaction. It also launched an infrastructure yield fund in 2018, which has managed to raise $350 million and plans to raise between $750 million-$1 billion under the same.
Now, the curious bit is the creation of a new kind of alternative assets business in India.