Edelweiss Financial to sell up to 20% stake in subsidiary to raise funds, shares drop as much as 8%

Edelweiss Financial said its wholly-owned subsidiary reported strong asset under management (AUM), growth and performance in the past few years. The AUM stood at Rs 50,000 crore as of September 2023 and had grown at a CAGR of 31% since FY17, it stated. In the past five years, fund investors have realised Rs 23,500 crores.

It also stated that the wholly-owned subsidiary is a dominant player in the private debt and real assets (yield) categories. Large global pension funds and insurance companies across the US, Canada and Europe are among its investors. These include domestic institutions, banks, endowment funds, HNI and Ultra HNI clients.

Meanwhile, Edelweiss Financial Services, provided additional details to the disclosure on the SAT order it had filed the previous day, saying that it is disappointed with the unexpected SAT judgment and continues to believe that the actions taken by its subsidiary Nuvama Clearing were prudent and well within the governing regulations.

The matter is related to NSE Clearing directing Nuvama Clearing (then Edelweiss Custodial) to reinstate securities of the clients of trading member Anugrah Stock & Broking.

“Penalising a professional clearing member (PCM) for a broker’s misdeeds is, in our view unjust, potentially jeopardizing industry norms and impeding the growth of PCMs,” the company stated.

Nuvama Clearing is evaluating all legal options in the matter, including but not limited to filing an appeal with the Supreme Court of India, it added. Nuvama Clearing has already earmarked with NSE Clearing Ltd. a sum of ₹236 crore in this regard and believes this will have no material impact on the brokerage, it said.

Edelweiss Financial Services shares dropped more than 8% to touch a low of ₹69.4 on BSE in morning deals. The stock was trading 2.69% lower at ₹74.5 apiece at 10.45am on Monday, December 13.