Edelweiss Financial tanks 13% despite clarification on investment in Kohinoor Group

Edelweiss Financial tanks 13% despite clarification on investment in Kohinoor Group

Shares of Edelweiss Financial Services fell 12.88 percent intraday to hit fresh 32-month low on August 23 despite clarification on the investment made by its Asset Reconstruction Company in Kohinoor Group.

The stock shed 35.4 percent in six consecutive sessions to hit Rs 93, the lowest level since December 2016, and 64 percent in last one year amid liquidity crisis in the NBFC industry and exposure to a few debt-laden companies.

It was quoting at Rs 101.05, down Rs 5.70, or 5.34 percent on the BSE at 1422 hours IST.

The Enforcement Directorate (ED) is examining an investment of Rs 450 crore made by Edelweiss Asset Reconstruction Company (ARC) in Kohinoor CTNL Infrastructure, reports Business Standard.

This is part of the ED probe into alleged irregularities in awarding loans and investment made in the real estate firm by beleaguered Infrastructure Leasing & Financial Services (IL&FS), the report said, adding the ED had called ARC executive (project manager) four days back to understand the deal structure, rationale behind the steep haircut from banks and also the status of a residential-cum-commercial project Kohinoor Square Tower, at Dadar.

Edelweiss in its clarification note to exchanges said the current probe by IL&FS on Kohinoor transactions are for the period of 2005-12 and related to transactions entered into by IL&FS and certain parties.

It had no exposure to Kohinoor during the concerned period, it added.

Further clarifying on its exposure, the company said Edelweiss ARC had participated in public auctions held after 2015 during which it bought the loans extended loans to Kohinoor Square project and its exposure is about Rs 120 crore invested under the 15:85 structure.

With the intention of completing the project and providing relief to both the small business owners, home buyers, and banks, Edelweiss ARC took the company through the IBC process, it said.

“A plan was approved by NCLT that would deliver unit owners their houses and small offices along with payment to lenders. The project is moving at a fast pace and is nearing completion with small shop owners having already been offered possession. The resolution of the asset is also on track to provide all lenders with maximum possible recovery,” Edelweiss said in a regulatory filing.

The company said the ED had asked for some information and the same was provided by Edelweiss.