MUMBAI Canada's second-biggest pension fund Caisse de depot et placement du Quebec (CDPQ) said on Monday it had partnered with Indian financial services firm Edelweiss Group to invest up to $700 million over the next four years in stressed assets and private debt opportunities in India.
Under the deal, CDPQ plans to take a 20 percent stake in Edelweiss Asset Reconstruction Company (EARC), a key unit that purchases bad loans and has about $4.5 billion in assets under management. It would also sit on EARC's board and the committee that oversees investments.
The companies did not disclose financial terms for the stake sale.
The Canadian fund is the latest to strike such a deal in India, where banks have been ordered to clean up an estimated $120 billion of bad and troubled loans.
India's biggest private sector lender ICICI Bank Ltd announced a similar tie-up with private equity firm Apollo Global Management LLC in August. That followed a deal between Canada's Brookfield Asset Management Inc and the State Bank of India in July to set up an asset reconstruction company in India to buy into troubled loans held by banks.
CDPQ and EARC plan to be involved with restructuring debt as well as provide financing to Indian entrepreneurs and companies.
The Canadian fund is also in active talks to take stakes in other Indian companies, focusing on the renewable energy, real estate, logistics and power sectors, CDPQ Chief Executive Michael Sabia told a news conference in Mumbai.
Together with other investors, the partnership aims to invest between 120 billion rupees to 140 billion rupees ($1.8 billion to $2.1 billion) in private debt and the restructuring of stressed assets in the country, they said in a statement.
CDPQ earlier this year opened its first Indian office in New Delhi to scout for investments in South Asia, and said in March it was committed to investing $150 million in renewable energy in India.
($1 = 66.4950 Indian rupees)
(Reporting by Zeba Siddiqui and Devidutta Tripathy in Mumbai; Editing by Edwina Gibbs)