Edelweiss Financial Services NCD Public Issue October 2023 Review

About the Issue

Edelweiss Financial Services Ltd has launched its public issue of NCDs to mobilize funds from the debt market. Read further to know more about the business of Edelweiss Financial Services Limited.

Series Issue Structure

*All the existing holders of NCDs/Bonds of ECL Finance Limited, Edelweiss Retail Finance Limited, and Nido Home Finance Limited (formerly known as Edelweiss Housing Finance Limited) are eligible for an additional incentive of 0.20%

About the Edelweiss Financial Services Limited

Previously known as Edelweiss Capital Limited, Edelweiss Financial Services Limited (“EFSL”) was incorporated in 1995 by Mr. Rashesh Shah and Mr. Venkat Ramaswamy. EFSL is registered as a Category I Merchant Banker with SEBI and is the parent company of the Edelweiss Group. The company on a standalone basis is primarily engaged in investment banking services and provides development, managerial and financial support to the businesses of the Edelweiss group entities. The Edelweiss Group offers a range of products and services, spanning varied asset classes and diversified consumer segments. The businesses of Edelweiss are organized around 8 broad lines –housing finance, NBFC, Wealth management & Mutual Funds, Alternatives, Life and General insurance and Asset Reconstruction.

About the Group

Over the years, the Edelweiss group has established a presence across major verticals in financial services business-like asset management, insurance, asset reconstruction and wealth management. The group is comprised of 27 subsidiaries as of September 22, 2023. The total income of the company was ₹ 8,632.59 crs for the year March 31, 2023, and ₹ 7,212.59 crs for the year March 31, 2022, on a consolidated basis. The company earned profit of ₹ 405.56 crs for the year ended March 31, 2023, and ₹ 212.07 crs for the year ended March 31, 2022, on a consolidated basis.

EFSL is promoted by Mr. Rashesh Shah and Mr. Venkatchalam Ramaswamy and who hold 15.44% and 6.32% of equity respectively. The holding of Edelweiss group is described in the chart below:

History of Edelweiss Financial Services Ltd

Edelweiss Financial Services Limited was incorporated on November 21, 1995, under the name Edelweiss Capital Limited and started operations as an investment banking firm after receipt of a Category II license from SEBI. Edelweiss Capital Limited subsequently received a Category I Merchant Banker license from SEBI with effect from October 16, 2000. The name of Edelweiss Capital Limited was changed to ‘Edelweiss Financial Services Limited’ with effect from August 1, 2011.

Edelweiss group operates through various entities offering a bouquet of products including loans, insurance, wealth management, etc. Following table provides a brief understanding of the entities and their businesses:

Financial Performance (at consolidated level)

*The company has gradually lowered its leverage since FY20 from 5.09x to 2.90x as of March 2023. It incurred heavy losses in FY20 and since then has been steadily improving its profitability.

CRAR of NBFCs in the group

Borrowings

Top 10 NCD holders as of June 30, 2023

Nature of Borrowings: (Rs crs)

Type of Borrowings: (Rs crs)

Peer Comparison* (March 2023)

*Consolidated

Credit Rating (CRISIL)

Conclusion

Comforts

• Adequate capitalization with multiple capital raises
• Diversified businesses across various financial services
• Comfortable asset quality with GNPAs at 2.01% and NNPA at 1.36% as of March 2023
• Reduction of exposure to real estate financing

Concerns

• Low profitability at the consolidated level
• Inconsistent trend in income at the consolidated level
• Exposure to real estate in the wholesale loan book