Edelweiss Financial Services Limited- A Review of Bond Public Issue
Edelweiss Financial Services Limited is coming up with Secured, Redeemable Non-Convertible Debentures from October 07, 2024, to October 18, 2024. This investment holds promising opportunities for investors, supported by an A+/Watch Negative by CRISIL and its strong profile and solid financial track record. This blog provides valuable insights about the company, its financial performance, and its current offering. Below are the details of the issue:
Issue Highlights
Issuer Name
Edelweiss Financial Services Limited
Nature of Instrument
Secured Redeemable Non-Convertible Debentures
Rating
A+/Watch Negative by CRISIL
Seniority
Senior Secured
Face Value
Rs. 1,000 per NCD
Issue Size
Rs.100 crores with green shoe option of Rs.100 crores
Coupon
Up To 11.00%
Tenor
24/36/60/120 months
Issue Date
October 07, 2024, to October 18, 2024
Minimum Investment
Rs. 10,000 and in multiple of 1NCD thereafter
Specific Terms of the NCD Public Issue across different series
Company Profile
Edelweiss Financial Services Limited (EFSL) was founded in 1995. It is one of India’s leading financial services conglomerates providing the right financial solutions for every financial stage.
Edelweiss Group is promoted by Mr. Rashesh Shah and Mr. Venkat Ramaswamy, who are seasoned professionals in the financial services industry with over three decades of experience.
The company, based in Mumbai, services its client base of ~8.2 million through a network of 251 offices and 3 international network offices (total 254 offices) with 5889 employees as of June 30, 2024.
EFSL’s key line of business includes:
Retail as well as Corporate Credit
Asset Management & Reconstruction
Wealth Management and
Insurance
Financials Highlights for the quarter ended June 30, 2024
Key Shareholders as of June 30, 2024
TIAA CREF Funds- 7.2%
CLSA Global Markets- 5.8%
LIC- 2.6%
Vanguard Group- 2.4%
1729 Capital & Advisors- 1.8%
Other shareholders include Flowering Tree Investment Management, BIH SA, Blackrock, Blackrock, Pabrai Investment Funds, Barclays, etc.
Key Operational and Financial Parameters (standalone basis):
(₹ in million)
Particulars
FY 2024
FY 2023
FY 2022
AUM
1,821,597.74
1,523,585.30
1,160,960.15
Networth
54,628.43
72,552.63
50,002.16
Profit for the year
6,952.12
23,882.47
9,333.58
Cash and Cash Equivalents
461.03
1,350.09
4,619.34
Interest Income
4,079.80
3,499.18
2,918.12
Finance Cost
3,268.90
3,027.37
2,142.50
Financial Metrics across Edelweiss Financial Services Limited’s Businesses as of Q1FY25.
Alternative Asset Management
The Edelweiss Group is one of the key players in the alternative asset management segment.
AUM at INR 56,350 Cr, up 17% YoY; FPAUM at INR 32,350 Cr, up 32% YoY
Real Assets strategy acquired assets of more than INR 8,000 Cr in value
Mutual Funds
AUM grew 24% YoY at INR 1,36,000 Cr
Equity AUM at INR 52,500 Cr, up 71% YoY
Equity net inflows grew 5x YoY at INR 2,100 Cr
Asset Reconstruction
Recovered INR 1,332 Cr, of which 18% was from the retail portfolio
The share of retail assets in capital employed stood at 14%
NBFC
Disbursed INR 200 Cr of retail loans, up 24% YoY; out of which 80% was under the CLM
Wholesale book reduced by 37% YoY to INR 3,950 Cr
Housing Finance
Disbursed INR 320 Cr, up 80% YoY out of which 25% was under the CLM model
Partnership with the State Bank of India continues to deepen
General Insurance
Gross Written Premium grew 56% YoY to INR 236 Cr
Issued 1.2 lakh policies, which grew 73% YoY
Life Insurance
Gross Premium grew 10% YoY at INR 275 Cr
AUM at INR 8,343 Cr, up 21% YoY
Source: Investor Presentation Q1FY25
Strengths of EFSL
Edelweiss’ strengths are rooted in its solid foundation and consistent performance in the financial services sector.
EFSL has evolved from a capital markets advisory business to a diversified financial services group engaged in businesses of asset management, asset reconstruction, and credit. This business model has helped to leverage relationships across business segments.
Pan-India distribution network
As of June 30, 2024, EFSL has a presence in Pan-India with a total of 254 offices. Its wide network lets acquire more customers for its retail businesses, asset management, and insurance business.
EFSL sources its funds through the issuance of redeemable non-convertible debentures and credit facilities from banks. It has built stable long-term relationships with its lenders and has a good track record of servicing its debts on time.
The company has robust internal controls and risk management systems to assess and monitor risks across different businesses. It seeks to manage and control risk exposure through separate but complementary financial, credit, and operational reporting systems.
Edelweiss has a strong brand franchise in financial services, known for its consistent focus on execution and innovation. Its primary focus is to build a clear-cut business identity that enhances awareness and consideration among its customers.
Source: Information Memorandum
Investor Categories
The investor categories within a bond public issue are the different segments of investors who can take part in the offering. The issuer allocates the ratio as per the guidelines set by regulatory bodies such as SEBI for distributing the existing bonds among the different investor categories. Given below are the allocation ratios for Edelweiss Financial Services Limited’s Public Issue across these investor categories.
Category I- Institutional Portion- 10% of the overall issue size- Public Financial Institutions, Insurance companies, Scheduled Banks, Provident Funds, AIFs, etc.
Category II– Non-institutional Investors- 10% of the overall issue size- Companies, Co-operative Banks, Trusts, Partnership Firms, Association of Persons, etc.
Category III– High Net-worth Individual Investors- 40% of the overall issue size- Resident Indian individuals or Hindu Undivided Families through the Karta applying for an amount aggregating to above Rs. 10,00,000 across all options of NCDs in the Issue.
Category IV– Retail- 40% of the overall issue size- Resident Indian Individuals or Hindu Undivided Families through Karta applying for an amount aggregating up to and including Rs. 10,00,000.
How to Apply through TheFixedIncome?
Information Memorandum:
An Information Memorandum (IM) is a detailed document that provides investors with in-depth details about the bond issue. It contains comprehensive details into the various aspects of the issuer’s business operations, financial background, management structure, details of the offerings, potential investment risks, and fund allocation from the issue, besides regulatory and legal disclosures.
The link to the Information Memorandum of bond public issue of Edelweiss Financial Services Limited is given below:
https://www.thefixedincome.com/storage/bondprimary_imfiles/1727949047EDELWEISSFINANCIALSERVICESLIMITED.pdf
Conclusion
Summing up, the bond public issue by Edelweiss Financial Services Limited offers a lucrative opportunity for investors interested in investing in Secured Redeemable Non-Convertible Debentures. Investors can participate in the offering and benefit from the returns provided by this issue. However, investors need to go through the Information Memorandum (IM) thoroughly and evaluate their risk tolerance and investment goals before investing.
Disclaimer: This article is based on publicly available information and other sources believed to be reliable. The information provided in this article is intended for general, educational, and awareness purposes only and should not be considered a comprehensive disclosure of every material fact. It should not be interpreted as investment advice for any individual or entity. The article makes no guarantees regarding the completeness or accuracy of the information and disclaims all liabilities, losses, and damages arising from the use of this information. Investments in debt securities/ municipal debt securities/securitized debt instruments are subject to risks including delay and/or default in payment. Read all the offer-related documents carefully. https://www.thefixedincome.com/blog/bonds-and-debt/u-gro-capital-bond-public-issue-information-and-disclaimer/
