InvestorQ : Why has Edelweiss sold off most of its wealth management business?
diksha shah made post

Why has Edelweiss sold off most of its wealth management business?

Answer
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Dawn Cherian answered.
3 weeks ago


Private equity investor PAG will invest Rs.2200 crore in Edelweiss Wealth Management for a 51% stake. Asset management will continue to be a major growth area for Edelweiss going ahead. The wealth business has grown to Rs.127,000 crore at 44% annualized over 6 years.

While the credit business may not be cash hungry, the advisory, asset management, wealth management and insurance business will need capital for growth over the next few years. This deal will help monetize its EWM to raise cash for other businesses.

On the ARC business, Edelweiss has been focusing on recoveries, which has improved in last few months. The ARC business focuses on stressed companies that have good assets but the management is dubious and the balance sheets are broken.

Rasesh Shah continues to be an optimist on the India growth story and sees green shoots. He expects the growth to restart but acknowledges that they would need to be cash heavy to capitalize on these opportunities. That is where the EWM stake sale fits in.