Edelweiss Alternative Asset Advisors has garnered over 40% of the $1 billion (about Rs 8,000 crore) it expects to collect for its third special situations fund, which also has a green shoe option of $500 million.
Edelweiss has already deployed Rs 1,000 crore in two opportunities, according to a statement issued by the firm.
Apart from investing in asset-heavy firm with a turnaround potential, the special situations fund will also explore acquisition financing for companies undergoing the bankruptcy process.
A special situations fund allows a company to identify viable underlying businesses that have a strong turnaround potential, or invest in situations where resolution of asset requires capital and domain expertise.
Edelweiss Alternative invested Rs 10,500 crore and realised cash of more than Rs 9,500 crore from the portfolio companies in the second fund launched in 2018. Out of the Rs 3,400 crore raised till now for the third fund, Edelweiss Alternative has already invested Rs 1,000 crore in two special situation opportunities.
“Special situation opportunities provide an exciting avenue for generating superior risk-adjusted returns for investors,” Amit Agarwal, Edelweiss Alternative's head for special situation strategy, said.
The strategy caters to corporates looking for specialised financing solutions to turnaround their business fortunes, and financial institutions looking to sell or resolve their existing portfolio assets.
Acquisition financing under bankruptcy process is also emerging as a good opportunity set, Agarwal said. Investors can generate high returns, akin to equity, while mitigating downside risk as large part of fund investments that are made in the nature of covenant-heavy credit instruments.
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