This fund raise is for alternative asset management. This special arrangement where they (as trustee or fund manager) can invest money as per their mandate. It is like mutual fund but in mutual fund you can’t do many things so they require setup like these for example you cannot give loan to builder or distressed project. You will get more details on Google.
So they want to say that they have raised 8k crs and deployed around 4.4k crs in various investments.
They seems to be moving goal post again -
1- Few quarters back, they said, they want to make wholesale to become zero. Now they are saying it won’t be zero but will be around 3700 cr going forward.
2- Next year seems to be bad as well going on their comments on profitability. Real estates all across the world are hitting all high- US, UK and some other parts of the world. In India also, there was a good traction in in last 6 month before covid second wave struck. Edelweiss has exposure to the segment which is less than 1 cr, which is in demand as people are migrating toward higher properties. Considering the tailwind for real estate sector (they may not be clear as of now, buy could become tailwind in few quarters depending upon covide waves), not sure why Edelweiss is conservative (or pessismtic). It seems that they have really messged this up earlier and taking considerably long time to clear the mess, than what the management is saying.
3- ECL Profitability will be low or non existent in FY22. Could very well be loss making year IMO.
In yesterday’s meeting, they have approved equity raising upto 2000cr. Considering market cap of 7000cr (11 June), they are talking about diluting existing shareholder to the tune of 20-25%.
I remember (could be wrong) they said they have raised enough equity last year, but they seems to be keen on raising the money even at the current (depressed?) valuation. Wonder why?
I still fail to understand how they manage to make no money in Mutual Fund and Alternative Asset Management.
Every quarter they talk about having sufficient liquidity and then keep on raising debt at ridiculous interest rates and now another 25% equity holder dilution.
Hi, I agree that it is very large dilution but I really doubt that this all will be raised as equity but my sense is that some portion could be equity given market conditions.
These are all standard options for all companies, they never specify what will be instruments when they approve borrowing limit for the year.
So we need to wait till they make any announcement regarding the same.
Hi,
In mutual fund, equity oriented funds have greater expense ratio than debt fund so more AUM in equity oriented scheme - the more fee you will earn but Edelweiss MF has more debt oriented fund (Bharat bond series).
They have just crossed 10k crs AUM in last quarter in equity fund and they have total AUM of 55k crs so you can see it is around 20% of total AUM.
Hope this answer your first question.
Now, coming to 2nd question,
I have already answered equity dilution part in one of my earlier post and for raising money again - I am also concerned why they are giving dividend if they need money to pay their liabilities. I am planning to write to CS on the same.
Thanks!
Disclosure : taken position for tracking purpose
update from my side:
result is really bad, unable to see what really happening and unable to understand how they will be profitable in a year. Expecting it to crash till it 50.if somehow it started to run i will exit at 120
summary of edelweiss: 1) its not going to perform another year.
2) out of 2300 cr only 500 cr can be seen in P&L, everything is complex to understand.
3) last year rasheesh shah said that they don’t need any new capital for wholesale bussiness yet they have to make another big impairment of 990 cr, and now they dont have money for anything else.
4) 800-900cr was about to use to pay outstanding debt but now they forget about it. And they decided to use it for bonus to their employee
5) fy 22 was about to year of growth now they learn the new word “ressilent”
I think we can give some time to management because FY21 was extraordinary in nature for NBFCs. We never know how the current status would have been if the past year was like Business as usual
Yes, I understand that. But I am really pissed off with their white lies, If they don’t know what they can expect in future then why they keep giving false positive forward looking statements?
900 Cr impairment is not lil thing that they overlooked it before. Plus last quarter they wanted to bring down group level debt by paying 800-900 Cr but now there wasn’t much talk about it.
Well, I am still invested and I think they will overcome this but lying isnt acceptable.
Can someone give more light on PAG deal receivable.
As per the balance sheet they have received only 1,423.07Cr in other income. What about remaining amount?
I checked that amount is correct. Only 1923 crore was about to receive. Some 200 crore something they received in starting maybe that was some token money or something. Now after deal being closed they received 1923 crore only. But we are only able to see 1423 crore only because they already said in their last call that they will be infusing 500 crore in wealth management business after deal closed. So 500 cr was infused in wealth management business. That’s why you only able to see 1423cr, amount is correct. You can’t can’t expect any new money from the deal. In the last conference rasheesh also said that pag will be also infusing some money, 400 cr if I am not wrong.
Theoretical it should be one time but I think we going to see some more in next two three quarter… I am kind of sure after listening their conference call, taht they are goign to impair more in coming quarter.
Bottomline is, they are not going to perform this year.
this is from fy20 annual report. posting it here so a new investors can see the difference between their action and word.