Edelweiss raises pre-IPO fund of up to ₹1,750 crore
MUMBAI: Financial services-focused Edelweiss group has raised its latest alternative investment fund—Edelweiss Crossover Opportunities Fund—a pre-initial public offering (IPO) fund of up to ₹1,750 crore (approx $270 million), said a senior executive of the firm. The Edelweiss group manages several alternative investment funds such as credit funds, real estate funds and a distressed assets fund.
The Crossover Opportunities Fund has already made its first investment. On 20 November, Mint reported that special situations fund SSG Capital Management had sold a 4.9% stake in IPObound Future Supply Chain Solutions Ltd to funds managed by Edelweiss. The transaction was valued at ₹124.8 crore.
“The fund will invest in companies that are at a ‘crossover’ point of value discovery as they go from private to public,” said Nitin Jain, CEo, global asset and wealth management, Edelweiss.
The fund will invest in a continuum of stages on either sides of the IPO event, he added. “It will invest early in pre-IPO, where it will invest in pre-DRHP (draft red herring prospectus) companies to catch early in the cycle, and capture value. It will also accumulate post-IPO, investing in and after the IPO to maximise the upside from high quality stocks.”
The robust performance of the IPO market, driven by a strong pipeline, motivated the firm to target the pre-IPO opportunity.
“The IPO pipeline is expected to remain strong, driven by factors including overdue PE exits, firms looking for growth capital given the positive economic outlook, and large business houses looking to unlock value by listing subsidiaries,” Jain said.
Capital markets are expected to remain stable in the near- to medium-term, backed by sound macroeconomic factors and a stable government, he added.
With fund-raising through IPOs touching a record high in 2017, pre-IPO investments are becoming more popular as a way to get some meaningful exposure to IPO-bound companies.
So far this year, companies have raised at least $600 million through pre-IPO funding rounds, according to a Mint analysis.
The activity has seen several firms raise dedicated funds to focus on pre-IPO opportunities.