EAAA India submits preliminary documents with the regulator for upcoming IPO, reserves 10% quota for parent Edelweiss Financial Services’s shareholders

According to the exchange filing of Edelweiss Financial Services Ltd, its alternate asset subsidiary Edelweiss Alternative Asset Advisors (EAAA) Ltd has filed a draft red herring prospectus on December 5, 2024, with the Securities and Exchange Board of India (SEBI) for the proposed initial public offer (IPO) of ₹1,500 crore.

This could be India's first IPO in the private capital segment. The proposed IPO comprises an entirely offer for sale of equity shares aggregating up to ₹1,500 crore by promoters, according to the draft red herring prospectus (DRHP) filed on Thursday.

EAAA’s promoter and holding company Edelweiss Financial Services Ltd has already announced in its Q2FY25 presentation its plan to sell a 10-20% stake in the asset management business and raise capital around ₹1,500 - ₹2,000 crore to reduce debt.

It also hinted at a potential stake sale in the mutual fund business as well over the next 18 months due to market buoyancy and positive feedback received.

Presently, Edelweiss Financial Service Ltd (EFSL) a listed company is a promoter entity along with Edel Finance Company Ltd and Edelweiss Securities and Investments Pvt ( both being controlled by EFSL) Ltd that holds a 100% stake in EAAA India business. Therefore, a 10% quota of the proposed IPO of EAAA has been reserved for the shareholders of Edelweiss Financial Services, according to the draft red herring prospectus filed with SEBI. An investor can buy one share of the EFSL to be eligible for shareholder quota.

The stake sale of EAAA is a strategic move of EFSL, aiming to reduce its own debt which stood at ₹11,810 crore as of September ended period. and creating a market value for its alternative asset advisory business run under EAAA India.

Edelweiss Alternatives Asset Advisors (India) Ltd (EAAA) is a private alternative asset management arm with over a decade of experience in Indian private debt and real assets. Its customers represent global institutional investors – pension funds, insurance companies, large family offices and ultra-high-net-worth individuals. EAAA also provides a unique platform for global investors to access the large and secular private debt and real asset opportunities in India.

EAAA is a major player in India's private capital segment and manages assets worth over ₹56,000 crore as of June 2024. In Q2FY25, EAAA has given a strong performance with ARR AUM at ₹44,900 crore up 13% year-on-year (YoY) and AUM at ₹57,250 crore, up 15% YoY and its net debt at ₹385 crore.

Additionally, in Q2, EAAA’s real assets portfolio received 3 for innovation and 1 for CSR Golden Star Awards. Also in the real assets segment it made an acquisition worth Rs 1,600 crore comprising a solar project with 472 MWH capacity. During H1FY25, EAAA’s profit after tax stood at ₹124 crore, up 36% year-on-year (YoY), while for Q2 its profit stood at ₹58 crore, up 29% YoY.

The IPO is subject to approvals and market conditions, and Edelweiss expects the EAAA India IPO by June next year if all approvals come through as per the procedure. Axis Capital Ltd, Jefferies India Pvt Ltd, Motilal Oswal Investment Advisors Ltd, and Nuvama Wealth Management Ltd are the book-running lead managers for the issue, and Link Intime India Pvt Ltd will be the registrar of the issue.