Mumbai: ECL Finance, the nonbanking financial arm of the Edelweiss Group plans to step up lending and expand its loan book with loans to entrepreneurs armed by the Rs 1,800-crore fund infusion by Canadian pension giant Caisse de dpt et placement du Qubec (CDPQ).Of the total Rs 30,000 crore loan book, around 60 per cent or Rs 18,000 crore is loans to companies and real estate, while around Rs 12,000 crore includes loans to small entrepreneurs and mortgages.
Deepak Mittal, CEO at ECL Finance said the company plans to reverse this ratio in the next few years with most of the loan book coming from business and mortgage loans.
With the Rs 1,800 crore from CDPQ, we have solved the equity needs for three or four years.
Our growth will come through much more granular and retail books like mortgage and SMEs.
Our focus is to grow the midmarket, SME and mortgages in tier-II and III cities because there is good demand and gap in terms of availability of credit, Mittal said.Edelweiss is targeting different niche businesses within SMEs and estimates the total market to be worth Rs 8-10 lakh crore.
There is a large opportunity in the middle space of entrepreneurs with GST and better tax compliance.
This space of small businesses is now opening up.
These markets will grow at a pace double than the 15-20 per cent we expect other businesses to grow, Mittal said.
Investment by CDPQ would be through compulsorily convertible debentures in three tranches, and the first investment of $150 million would be converted to equity shares after two years.
The remaining $100 million would be invested in two equal tranches at the end of the first and second years of the initial investment.