Edelweiss Group's 60-year-old Chairman Rashesh Shah, who is under investigation along with four others in connection with art director Nitin Desai suicide case, is a well-known name in the financial world. Shah, who has been an entrepreneur over three decades, honed his skills at the ICICI Group, and has built a thriving financial services business comprising lending, asset management, insurance and asset reconstruction.
The Group’s flagship, Edelweiss Financial Services Ltd, which is also a holding company, earned revenues of Rs 8,764 crore in 2022-23. It has a net worth of Rs 8,502 crore, net debt of Rs 16,360 crore and profit, excluding insurance, is around Rs 610 crore. This listed entity has a market capitalisation of Rs 4,369 crore. Let’s study the structure of the Group.
Equity stake of Rashesh Shah’s family
Promoter Rashesh Shah, along with wife Vidya Shah, and others hold 32.78 per cent stake in Edelweiss Financial Services Ltd. The Life Insurance Corporation also owns 2.57 per cent stake. Late Rakesh Jhunjhunwala’s wife Rekha Jhunjhunwala used to own 1.33 per cent till March 2023, but her name does not figure in the latest shareholding disclosure. She could have reduced her equity stake below 1 per cent or completely exited the company.
For major lines of business
Retail Credit : A NBFC in the consumer space with key products being home loans, SME and Business Loans
Asset Management (Mutual Funds and Alternative Assets): Mutual fund play in the equities and debt market
Asset Reconstruction: buying bad loans from banks and institutions for resolution
Insurance (Life, General); licence for life and non-life business
Group’s corporate structure
Edelweiss Financial Services Ltd is the holding company for the Group with businesses like credit, asset management , asset reconstruction and insurance under it. Under the credit space, the holding company owns 100 per cent stake in non-banking finance companies –ECL Finance and Nido Home Finance Ltd. ECL Finance is the company that extended loans to Nitin Desai’s company ND’s Art World, which later defaulted on the loans. In the asset reconstruction company (ARC), the holding company has 60 per cent stake. North America’s CDPQ also holds a stake in the Group’s ARC business.
In the asset management space, the holding company owns 100 per cent in both the AMC, or the mutual fund business, as well as alternate assets. In the insurance space , the holding company has 100 per cent in general insurance and 75 per cent in life insurance where Japanese player Tokio Life is a partner.
Update on Group’s each business
The NBFC has been de-growing its wholesale book for the last 4-5 years because of the credit risk as well as asset- liability mismatches. In fact, wholesale books gave the company profits in the last few years, but stress in certain sectors like real estate impacted the profitability. The focus is now on retail where the NBFC is growing by way of partnerships and co-lending arrangements. This business has the highest debt of close to Rs 8,000 crore and profits of Rs 155 crore in 2022-23.
The asset management business is growing robustly for the group. The AMC, or the mutual fund business, has an AUM of Rs 1.10 lakh crore. Similarly, the alternate asset business has AUM of Rs 50,000 crore. AMC is a profitable business with profits of Rs 177 crore in 2022-23. The mutual fund is a big player in equities.
The Group runs the largest asset reconstruction business in India with AUM of Rs 37,000 crore. The company buys bad loans, mostly from banks and resolves them by using the SARFAESI, IBC and other legal ways to recover loans from defaulters. This company with 15 years of track record has recovered Rs 45,000 crore from bad assets. In fact, it has paid back around Rs 43,000 crore to banks and financial institutions. The ARC business is also profitable with net profits of Rs 318 crore in 2022-23. In fact, the company, which was majorly into corporate bad loans, is now focusing more on retail bad loans.
Both the insurance companies are in the stage of building up the business.
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