Share price of Edelweiss Financial Services gained over 3% in early trade after the firm said Hong Kong-based private equity firm Pacific Alliance Group (PAG) will buy a 51% stake in its wealth management business for Rs 2,244 crore.
Edelweiss Financial Services share rose up to 3.33% to Rs 86.50 against previous close of Rs 83.85 on BSE. The stock has risen 2.69% in the last 2 days. Edelweiss Financial share is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. However, in a year, the share has lost 29% and fallen 23% since the beginning of this year.
In a month, the stock has risen 13%. Total 0.68 lakh shares changed hands amounting to turnover of Rs 57.75 on BSE. Market cap of the firm rose to Rs 7,817 crore. This is PAG's first majority equity investment in India.
The transaction is expected to close in the next 4-6 months subject to regulatory approvals. The financial services firm plans to list demerge and list Edelweiss Wealth Management after the completion of transaction.
This is largest equity raise by Edelweiss Group till date, the firm said.
Rashesh Shah, Chairman and CEO, Edelweiss Financial Services said, "Our well-capitalised businesses have great partners with impeccable credentials who will provide them with expertise, reach and scale. When growth resumes, our businesses will be very well placed to participate in the India growth story again. Additionally, over the last 24 months, we have successfully managed our liquidity, leverage and asset quality and will comfortably do so through FY21."
Meanwhile, the firm reported a loss of Rs 245 crore in Q1 of current fiscal against Rs 132 crore loss in corresponding period of previous fiscal. Total income fell 25% to Rs 1919 crore in Q1 against Rs 2,581 crore in the corresponding period of previous fiscal.