Edelweiss Financial Services, a diversified financial services conglomerate, is in the process of selling its entire commodities business as it intends to make a fresh bid at getting a banking licence.
According to sources close to the development, after the NSEL scam, regulatory authorities were not comfortable with bidders for bank licences having sizeable exposures to commodities.
The sources said that Edelweiss Commodities had shut down its Singapore office and talks were on with several parties who would be interested in acquiring the business.
Last November, the Group had sold its agricultural commodities trading business, comprising both domestic and international operations, to Inditrade Business Consultants.
The business that Edelweiss is now looking to sell has a gold refinery and 265 warehouses. An Australian company has evinced interest in acquiring its gold refinery in Ahmedabad and the deal could be announced in March.
Edelweiss Commodities began operations in 2008 and set up offices in Dubai, Singapore, Africa and Canada. In FY16, the commodities business made a profit of Rs 65 crore.
In response to a questionnaire, a spokesperson for Edelweiss said on email: “As per Edelweiss’s philosophy and long held business strategy, we continuously reallocate resources including capital and people to better serve our customer needs and also where we see business opportunities. We are currently seeing very large scalable opportunities in credit, especially retail credit, as well as asset management and wealth management businesses and will continue to allocate resources towards these for maximum growth.”
Interestingly, when the Group entered the commodity business in 2008 it had said it wanted a play in bullion and agricultural commodities. Edelweiss Commodities set up a gold refinery in Ahmedabad and invested Rs 90 crore. The company also built significant warehousing capacity across India for agricultural commodities. The agricultural commodities business was set up to meet the warehousing and finance needs of producers and sellers. The company was also among the top importers of pulses in India.
The financial services conglomerate is now focusing on growing its retail and wholesale credit book. At the end of nine months of FY17, Edelweiss Finance’s total credit book was at Rs 24,972 crore, of which the retail book is Rs 7,823 crore. The group is also present in wealth management services and asset management and has a asset reconstruction company that manages stressed assets.