What Edelweiss’ reported stake sale in wealth, AMC business means for stock

Edelweiss Financial Services, one of the fastest growing non-banking financial companies (NBFCs) in the country, is considering part monetization of its stake (around 20-25 percent) in its wealth and asset management business as per media sources.

As reported by The Economic Times, the potential deal is likely to value the wealth and asset management business around Rs 12,000-15,000 crore. Edelweiss’ current market capitalization is around Rs 17,300 crore. The stock has corrected more than 40 percent from its 52-week high after concerns over liquidity engulged the NBFC sector.

If the deal value reported by ET is anything to go by, the upside to the stock can be meaningful.

The Edelweiss group, which commenced operations as a capital market player, has incubated several business segments like credit (wholesale and retail lending), distressed assets, insurance, and wealth and asset management over the past few years.While the news is as yet unconfirmed, the reported interest enthuses us, especially the fact that the wealth and asset management business is drawing huge interest despite the business being adversely impacted by SEBI’s order to cap total expense ratio and resultant cut in distributors’ commissions.