Edelweiss Financial Services Limited Bond Public Issue (NCD IPO)- Bond Analysis

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Edelweiss Financial Services Limited Bond Analysis
Edelweiss Financial Services Limited Bond Analysis

Edelweiss Financial Services Limited has come up with a Secured Redeemable Non-Convertible Debentures Public Issue (NCD IPO) from July 4, 2023, to July 17, 2023. This NCD Public Issue, rated AA- by CRISIL and ACUITE, provides an attractive investment opportunity for investors. The blog will provide you with comprehensive information about the issue and the company, including its financial performance. The details of the issue are given below:

Issue Highlights

Issuer Name Edelweiss Financial Services Limited
Nature of Instrument Secured Redeemable Non-Convertible Debentures
Rating “CRISIL AA-/Negative” and “ACUITE AA-/ Negative” 
Seniority Senior
Face Value Rs. 1,000 per NCD
Base Issue Size Rs. 1,500 million  
Option to retain oversubscription Rs. 1,500 million
Coupon Up to 10.45%
Tenor 24/36/60/120 months
Issue Date July 4, 2023, to July 17, 2023
Minimum Investment Rs. 10,000 only

 

Specific Terms of the NCD Public Issue across different series

Specific Terms of the NCD
Specific Terms of the NCD

Company Profile

  • Edelweiss Financial Services Limited (EFSL), established in 1995, is one of India’s prominent financial services conglomerates, providing a wide range of financial solutions at various stages of the client’s financial journey. 
  • The promoters of Edelweiss Group are Mr. Rashesh Shah and Mr. Venkat Ramaswamy, experienced professionals with over 30 years of experience in the financial services sector.
  • The Group is headquartered in Mumbai, with 300 offices across major cities and nearly 8,500 employees catering to 6.7 million clients.
  • EFSL is a diversified company serving sectors like: 
  • Retail as well as Corporate Credit
  • Asset Management and 
  • Life and General Insurance 
  • The wealth management business, now known as Nuvama Wealth Management, is demerged and is an associate business in partnership with PAG, where PAG is the majority owner of the business.

Key Shareholders as of March 31, 2023

Name % of Shareholding
Pabrai Investment Funds 8.5%
BIH SA 4.8%
TIAA CREF funds 4.3%
Baron Asset Management 4.2%
LIC 2.6%
Vanguard Group 2.2%
Flowering Tree Investment Management 1.7%
Rekha Jhunjhunwala 1.5%
Barclays 1.0% 
Blackrock 1.0%

 

Performance Highlights of Edelweiss for the Year Ended March 2023

Performance Highlights of Edelweiss for the Year Ended March 2023
Performance Highlights of Edelweiss for the Year Ended March 2023

Financial Metrics across EFSL’s businesses

  • The Asset Management business of EFSL experienced AUM growth of 31% Year on Year, reaching INR 177 Cr in profitability for the year. 
  • The Alternatives AUM stood at INR 46,500 Cr, 52% growth YoY. Moreover, the profit after tax witnessed over 3 times growth Year on Year.
  • The Asset Reconstruction business demonstrated a profitability of INR 318 Cr for the year, reflecting 26% growth Year on Year.
  • The Credit business profitability stood at Rs. 153 Cr for the year showing a growth of 38% Year on Year. 
  • The Gross written premium for the General Insurance business amounted to INR 552 Cr indicating a YoY growth of 53%.
  • Additionally, the Life Insurance business achieved the milestone of embedded value break-even.

Rating Rationale:

CRISIL in its rating rationale highlights the following key rating drivers for Edelweiss Financial Services Limited:

Strengths:

  • Adequate capitalization, supported by multiple capital raises.
  • Diversified financial services player, with demonstrated ability to build a significant competitive position
  • Liquidity: Adequate

Weakness:

  • Asset quality remains vulnerable 
  • Low profitability

Investor Categories:

Categories of investors in a bond public issue refer to the different groups or types of investors who can participate in the offering. These categories are typically defined by the issuer as per the guidelines laid by regulatory authorities like SEBI to allocate the available bonds among various investor segments. Below is the category-wise allocation ratio of the Edelweiss Public Issue. 

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 ₹ 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 ₹10,00,000.   

How to Apply through TheFixedIncome.com?

Apply easily using the following three steps: 

How to Apply through_TheFixedIncome.com
How to Apply through_TheFixedIncome.com

Information Memorandum:

An information Memorandum (IM) is a comprehensive document that provides investors with detailed information about the bond offering. It serves as an important source of information for investors to evaluate the bond and make informed decisions. An IM typically includes details about the issuer’s business, financial history, management team, offering details, the risks associated with investing in the bond, the use of proceeds from the issue, and regulatory and legal information.

 

Here is the link to the Information Memorandum of bond public issue of Edelweiss Financial Services Limited-  

https://www.thefixedincome.com/storage/bondprimary_imfiles/1688445532IMEDEL.pdf

Conclusion

The Edelweiss Financial Services Limited Bond Public Issue (NCD IPO) presents investors with an opportunity to invest in secured redeemable non-convertible debentures. With a strong company profile, notable financial performance, and AA- credit ratings, Edelweiss Financial Services Limited aims to attract investors from different categories. Before investing, interested individuals should carefully review the Information Memorandum and consider their risk appetite and investment objectives.

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 the debt market are subject to market risk, kindly read all the documents carefully. 

 

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