Canadian fund Caisse, India's Edelweiss team up for investment in stressed assets

Canada's second-biggest pension fund Caisse de depot et placement du Quebec (CDPQ) has teamed up with Indian financial services firm Edelweiss Group to invest up to $700 million in Indian debt market, including stressed assets, over the next four years.

Under the deal, CDPQ will take a 20-per cent equity stake in Edelweiss Asset Reconstruction Company (EARC), and may also become a member of the board of Edelweiss that has about $4.5 billion in assets under management.

The companies did not disclose financial terms of the stake sale.

CDPQ and EARC plan to be involved with restructuring debt as well as provide financing to Indian entrepreneurs and companies.

CDPQ  is the latest Canadian fund to strike a deal in India, where banks are expected to clean up an estimated $120 billion of bad and troubled loans.

Another Canadian fund, Brookfield Asset Management Inc, had in July teamed up with the State Bank of India to set up an asset reconstruction company in India to buy into troubled loans held by banks.

ICICI India's biggest private sector lender ICICI Bank Ltd announced a similar tie-up with private equity firm Apollo Global Management LLC in August.

CPDQ is also in active talks with Indian companies in the renewable energy, real estate, logistics and power sectors for investment opportunities, CDPQ chief executive Michael Sabia told a news conference in Mumbai.

Together with other investors, the partnership aims to invest between Rs12,000 crore and Rs14,000 crore ($1.8 billion to $2.1 billion) in private debt and the restructuring of stressed assets in the country, they said in a statement.

CDPQ earlier this year opened its first Indian office in New Delhi to scout for investments in South Asia, and said in March it was committed to investing $150 million in renewable energy in India.