Edelweiss Financial Services Limited (NSE: EDELWEISS) Q3 2026 Earnings Call dated Feb. 10, 2026
Corporate Participants:
Rashesh Shah — Chairman
Priyadeep Chopra — President
Analysts:
Kartikeya Mohata — Analyst
Siddhesh Dharmadhikari — Analyst
Parth Jariwala — Analyst
Aditya Makharia — Analyst
Vishal Sethia — Analyst
Shriyansh — Analyst
Sujal Chandaliya — Analyst
Prabhav Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good afternoon and welcome to third quarter FY26 earnings conference call of Edelweiss Financial Services Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing 100 on your Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Priyadeep Chopra, President, Edelweiss Financial Services Limited. Thank you. And over to you ma’. Am.
Priyadeep Chopra — President
Thank you Michelle. And a very warm welcome to the earnings call for the quarter and nine months ended December 2025. Today we have on the call with us Mr. Rashesh Shah, Chairman and MD of Edelweiss and Ms. Ananya Puneja, Chief Financial Officer, Edelweiss Financial Services Limited. We hope that you’ve all had a chance to review the investor presentations that we filed earlier today. During our discussions we will be making references to it this quarter. We’ve also filed two special presentations titled Understanding EFSL’s, PNL and a presentation on our Growth journey. We hope you find them useful.
Please take a moment and review the safe harbor statements in our presentations. We will today be making statements that will be forward looking in nature and and hence may involve certain risks and uncertainties. With that welcoming you all, I hand over the call to Rashesh to begin the proceedings. Thank you all for being here. Once again over to you Rashesh.
Rashesh Shah — Chairman
Thank you. Thank you Priya and good afternoon to all of you. Once again welcome to our earnings call for this quarter and for the nine months. A lot of you have been part of our journey and these interactions that. We have after results has been one. Of the high points for us where we enjoy your feedback, your questions, your inputs. So I do hope that today is the same. And thank you once again for being here to start the call. As I think Indian economy, we know we are in that Goldilocks stage where economy is doing well, inflation is down, even the union budget this time was very steady. The least disruptive issues were there. But it also I think highlighted one new thing which is the start of the credit reforms and what I call. Double barrel capital market. Our capital market has been equity led. And I think equity plus bond because.
I think we do now need our credit system to also scale up the. Way our equity systems have scaled up. Good fiscal discipline on the government and. RBI is maintaining liquidity very healthy. And obviously the US deal and the EU trade deal all These are great boosters. Of course we have this very paradoxical situation that in spite of things being so good for the economy, the foreign investors have been on a spree of selling and for some reason, whether it’s the rupee or the earnings growth or the valuations, a lot of them I have still been selling in India. I was in the US recently and I still found that unfortunately a lot. Of them are still viewing India with a lot of skepticism. India opportunities a lot of skepticism. But at least fortunately on this we are in a good place in India. Our capital markets are fairly atmanirbhar.
The local investors, household savings via mutual fund insurance, SIPs, all of that are actually now the real source of our capital for capital formation. So I think that’s the good news for India. I do believe foreigners will be back. They keep on shifting their allocations but. On a long term basis I do. Believe that once there are some catalysts, maybe the US trade deal was one catalyst, maybe a little bit of growth coming back is another catalyst. Private capex, maybe the rupee which is stabilizing will be another catalyst. So I do hope that in the. Next three, four months will start seeing foreigners coming back or at least not selling as aggressively as they’ve been selling.
So with that let me give you an update on Edelweiss. I think before we go into the business growth and all some of the strategic updates. First, as you would have seen we announced today that Carlyle is investing in. Our housing finance subsidiary Nedo. I think a lot of you know Carlyle is one of the world’s largest and most diversified global investment firms. They will totally invest to 2,100 crores in this deal. They will do a 600 odd crore. Secondary transaction and they will invest 1500. Crores into the company as a primary investment. So the company already has approximately 800 crores of equity. So with this additional 1500 the total capital of the company will become 2,300. By buying secondary, Carlyle will get 45%. And then they will infuse another primary 15 crores so that eventual stack will be closer to 74%. The good other news is Aditya Puri. Who’S an, I think an icon.
All of us respect him a lot. I, I’ve been a big fan. Is also an advisor to Carlisle and he. Is also in his personal capacity participating with an investment in this. So there’ll be Carl, there’ll be Edelweiss and there’ll be Aditya Puri as an investor. Three investors in this Deal after closing. Also in Carlis Sunil Kaul, who’s a. Partner at Carline who’s done a lot of great deals like SBI Cards and yes bank and PNB Housing, he has been leading the transaction. So for us the partner has also. Been very important and the skill set and capability that they bring truly will allow us to scale up this platform. Which has been on a steady growth path. But I think with the capital and the platform we have, I think it will be ready for takeoff and it. Is a win win. I think for Carlyle they get a good stake in a good platform. For Edelweiss this allows us to partially get some cash to deleverage our corporate debt.
But also we have a stake in this which we think will grow pretty well. And even for the management team this will be who all have stock options in the business, this will be a way of creating value and also I think creating a really very high value franchise in affordable housing. The second update friends is on EAA IPO update. We have filed DRSP last month. We are waiting to get feedback from SEBI in the regular process and we do believe that this year we will want to list and again the idea of listing A has many objectives. One is we have given stock options to our employees and this IPO and listing of EAA will allow also those stock opt to showcase value. Also it will allow us some capital for Alvis to deliver our corporate debt. As you know EAA throws out positive operating cash flow. They are pretty strong.
Their growth trajectory has been good so. They don’t need capital. But this will allow us to deliver our corporate debt but as well as also get listed and create value for employees in their stock options. The third is the best bridge investment in Edelweiss mutual fund. The first round of transaction has been done in the last quarter. They bought 10%, they have another 5% they will buy by June. So that is also steady state going. As you would have seen in the results, the mutual fund profit has been on a fairly good growth trajectory. So even the mutual fund which was always growing very well on AUM is now starting to go well on the profitability curve also. And before I get into the quarterly. Updates of Edelweiss, as Priya said, we have filed a couple of documents along with this investor presentation.
One is on how to understand Edelweiss profit and loss account consolidated. Quite a few of you have given. Us the feedback of you know that there is a lot of grapple involved so we try to simplify it how to understand our P and L and what are the drivers of that. And the second is our growth journey. And the reason for that growth journey. In charts is the last few years. A lot of our communication, a lot of our conversation has been dominated by NBFC and the wholesale book where we had issues and we have delivered that and reduced the wholesale book. But that conversation actually did not allow. Us to really highlight in these five years how a lot of our other businesses, EAA Mutual Fund, both the insurance businesses, how all of them even MSME in our nbfc, how they are growing.
So there was growth happening in other parts of Edelweiss Group, but maybe it was not highlighted as much. So we’ve tried to also to all our stakeholders showcase the last five year journey in various businesses and where growth has happened and how we have performed. It’s a pure data slide. There is no commentary around. So that’s a growth journey on EFSL PNL broad structure as we have explained. And I’ll just try to summarize it out here. The consolidated profit and loss of Edelweiss. That you all see has two distinct buckets. One is the operating businesses pat, the profit after tax of the seven underlying businesses we have and the holding company and the holding entities which is of corporate. So we divide in two parts, underlying business and corporate.
The good news has been the underlying. Business profit has been on a steady growth. Each of the underlying business is standalone. With a fully dedicated management team. Independent board have their own P and. L balance sheet and they control a. Large part of the journey. We get involved at governance at board level, we get involved at strategy level. But largely they are very board run. We are all on the board. So even entities which are 100% subsidiary are still run as standalone, hundred percent standalone independent entities. The corporate group focuses on supporting this. Underlying business through capital allocation, investment, oversight. We provide treasury support services for the liquidity management. We have a lot of experience on. That, some core shared services. And the corporate also is also looking.
To incubate and invest in new capabilities and new businesses. So the corporate job and the operating. Business entity jobs are fairly well divided and are very much in harmony. So our path is a summation of. Both these path, the business pat and the corporate pat. The business pat is where the heart. Of the value creation is. That has been growing and we would. Like to grow it at 20% a year. That is what we’ve been saying. And given the stage at which all. Our businesses are the platforms they build, we think it is it is, it is possible. So the business pat a lot of. Stability, a lot of, you know, growth around that. However, corporate pat will always be volatile. Because corporate is like a holding company. We have income coming from dividend and stake sale and capital gains and we have expenses which is interest cost.
And also corporate pat is always volatile. And as you know in the last few years we did take a little. Bit more debt on the corporate balance sheet to make sure the individual operating businesses were well capitalized and did not suffer any lack of resources. So our insurance company, even our asset management companies, even five years ago when they needed a little bit of capital, we were always providing that. So we didn’t allow the NBFC deleveraging to result in lack of resources for our other operating businesses and that is why they’ve been able to grow. But in order to do that the corporate had to borrow some debt. We also made sure the NBFC always had adequate liquidity and that is the corporate debt.
We have spoken about that. We are going to deleverage with stake sales and all. So the corporate has a lot of. Episodic and volatile P and L. Businesses have steady P and L and when. You add the two that becomes the. Consolidated P and L for Edelweiss. So would be very happy to hear that because we are not one operating company. We are an investment company with multiple businesses as various stages of business. Friends, the scale up on profit of. Underlying business that I’ve spoken last two years we have been growing at 22%. Our asset management and the alternative asset. E triple A and mutual funds have grown at 28% and 58% CAGR over the same period. Our insurance business is on track for breakeven and we are on the path for reducing corporate debt.
As we have seen the Carlyle deal, the mutual fund stakes in the EAA ipo all this is going to help us reduce the corporate debt. Now it is fairly manageable. We are not unduly worried about it. But we want to bring it down. Because I think that that interest burden itself is a drag on profitability for edelweiss. Update for the quarter ended December and. The nine months steady growth in profit consolidated pat is up because of the eaa, the EAMC stake sale and there. Have been a lot of underlying exceptional. Items in this quarter. As you know there was GST impact in life insurance, graduate impact on labor. COD plus in this year we have. Implemented ESOP across all the businesses and each business runs the ESOP cost through their P and L and we are okay with that because we also think ESOP is a cost that the business is incurring.
It is part of the upside that the employees get. So it goes through the PNL though it’s a non cash item. So Alternative Asset Management FPM has been steady growth. 33% growth in this YOY we have almost 42,000, 41,900 crores of fee paying AUM. Our total AUM is obviously much higher because we have dry powder and all. But 41920 is what we look at as a key metric as a fee paying AUM which makes us one of the larger alternative asset managers in the country. Mutual fund AUM also grew by 33%. Equity AUM is 83,000 crores. Now we have been targeting 100,000 crores of equity AUM for quite some time. I’m happy to report that we’re getting closer to that. And both MSME and housing in the last year have started growing again. So MSME disbursements have grown by 84% in the nine months and housing finance by 38% on a yoy basis. So good growth in disbursement in the both the credit business that are very small and they’ve been consolidating for the last few years but now the growth is starting on that. And insurance the loss has come down.
General insurance loss has come down. Customer franchise is growing at 13% at 31% per annum we have our total customer is about 13 million is a customer franchise we have. And our total customer assets are 2:40,000 crore. So that is also steady growth. So again as you would have seen. All the businesses are well capitalized capital adequacy and they have been growing pretty well. We hold a fair amount of liquidity now we’ve gone into surplus liquidity zone. And just a few highlights on the individual businesses. Alternative asset management the business we raised about 7,500 crores in the first nine.
Months which is a growth of 67%. So this is a good amount of. Fundraising, fresh fundraising that happened. We have to. We have an inbit already listed called. NZEN where we did a preferential issue of almost 700 crores. Our the enzyme is very energy focused in it. It’s a to Z on energy. We have a second invit for which we have filed a document called CTS. Which has an issue size of 1300. This will be a transportation inbit. So our invits are not asset specific but theme specific. So energy is one in which transportation is another Invit and for those of you following and REIT they also becoming a very important asset class in India.
We also launched our ESOP 4 the. Performing Credit Fund for and we’re getting good interest from local and international clients. But this year we will raise that money. We have to raise that money and close that fund mutual fund as I said good growth. Our SIP book is now 558 crores is the monthly SIP book which is a 55% growth. The retail folios are 34 lakhs. So good growth in folios SIP book. Equity, AUM in this, in our ARC. We have recovered 842 crores this quarter. So ARC continues to be still a business where the recoveries of old aum. Is a primary function. We are buying new assets also especially in the retail side. And now the retail assets in ARC.
As a percentage of total capital deployed has gone up to 25%. It was 15% one year ago. So as I said NBFC and housing. Both of them, they’ve started their disbursement scale up again and both general insurance has grown by 47% on a YoY basis in the quarter and life insurance our gross premium is grown at 15%. So again to sum it up friends, before we open it up for questions, we are on track for all our priorities growth, reducing corporate debt. But again it’s, it’s like you know. One quarter at a time and the journey is ongoing. But I think India is in a. Good place and I hope that areawise also uses opportunity India has to grow and create value for all our stakeholders. Thank you very much. Now I’ll hand it over to all of you for any questions.
Questions and Answers:
operator
Thank you very much sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask questions may press Star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press Star and one to ask questions at this time. The first question is from the line of Kartikeya Mohata from Motilal Oswal Financial Services. Please go ahead.
Kartikeya Mohata
Yeah, thanks for the opportunity. First of all, congratulations on the deal with Carlisle. Could you please share your perspective on the key strategic synergies and value creation opportunities expected for the business post this transaction? And was there any reason why we did not sell the entire 100% and particularly basically I wanted to Know like the Needles medium term roadmap in terms of AUM growth and all after Cardline being on board.
Rashesh Shah
So yeah, as you as you know last three, four years in Nero we have pivoted to affordable housing and also. Earlier a lot of origination was through dss. Slowly we are doing a lot more direct. So the deal with Carla, they do. Bring a lot of understanding and expertise in housing finance. Having done PNB and having Aditya Puri also investing in that. So there will be a lot more capabilities that they will also bring along with the platform that we have built. So we have a good platform. Last three years we’ve been actually building very robust affordable housing finance business also this will give us additional capital because I think now NBFC Housing finance is also very capital led and first you need equity, then you borrow and scale up.
So I think that 1500 crore equity capital will also transform the business. So we have a platform we could have grown but with additional capital it will be you know, doubly strong. And thirdly we could have sold the whole thing but we didn’t want to sell because we wanted to sell a. Little bit obviously as I said to reduce our corporate debt. So if we had sold the whole thing we would have maybe got another. 5, 600 crores more. But we do think the stake we. Are holding, the 26% could be valued a lot more in the future. And you can do the math with our 800 crores of current equity and 1500 equity coming from them, equity will be 2300. And if you add up and if you really build a robust business with our team, our platform, their capability, their. Hand holding and we have seen that.
Noam also if you saw after getting PAG as a partner, the platform was very strong. The entire management team is the same Edelweiss management team. But giving some independence, some flexibility, some capital does allow the business and the platform to be scaling up in a very optimized manner. So we could have grown on our own slowly, slowly, slowly. But this will give us opportunity to turbocharge and I think that 26% that we want to retain we hope will also be valuable. So our idea was both, it’s a win, win, we’ve got some capital now to reduce debt but some other to also create value and that will also be liquid because in two, three years this business should hopefully scale up well. So that’s broadly the thinking we had.
Kartikeya Mohata
That’S really helpful. So one, one more question. So with most of your subsidiaries like some of the subsidies Actually which have either completed or announced as part of the value unlock journey. Could you share your thoughts on the next phase of value creation? Are there any additional businesses under evaluation and what could be the broad time frame for any potential announcements?
Rashesh Shah
As we have said and again, when we say value unlocking, it is not. Always a sale of the business or a majority stake sale and all that. It’s a combination of many things. Like we did value unlocking via demerger of Nuama and giving shares in the hands of the shareholders. Even EAA IPO will be value unlocking because we will showcase the value of eaa, get some capital which will reduce our debt at a corporate level. So the three things we had announced. A year ago that three things we are exploring. One was the mutual fund where we have completed the stake sale. One was housing finance that we announced today. And third was EAA where we have filed the DRSP and we expect to dilute approximately 15% equity. So in the mutual fund we still will own 85% equity. In Epipoly we loan 85% equity.
And as we finalize any other unlocking. Plants, we’ll keep on announcing it. So this was what we had announced a year ago and we are just executing, I think this we also want. To endorse that every announcement we have. Made, we have followed through on that whether it was the reduction of debt, reduction of the wholesale book stake sale. So we have been very consistent in executing what our plans are and as we make new plans for more value unlocking. So I think value creation comes from. Building great companies, great platform and value unlocking comes after that. Because once you build a good, like. If you look at Nuama, it was a great platform and then value unlocking became easier. Same thing with Nero. So I think value unlocking gets easier. If you build value. And as I said, the building value is the growth and quality of all our businesses that we are building.
Kartikeya Mohata
Sure, sure. Thank you sir and all the best.
operator
Thank you. The next question is from the line of Prabhav Shah from Equidas. Please go ahead.
Prabhav Shah
Hello. Thank you for this opportunity. I have two sets of questions. So the first one is like EAA, as you mentioned, EAA recorded imp 67% year on growth in fundraising for the first nine months. So like could you tell us how do you see this fundraising going forward? And like any new fund launches or strategies are there in pipeline. And secondly on like you mentioned initially that the geopolitical environment is due to geopolitical environment, the investors are still, still Doubtful about investing in India. So like is this affecting our operations in any way?
Rashesh Shah
So I think on the second one as I said investors globally are slightly you know colder to India and they. Have been for the last couple of years. But even in that we’ve been able to raise money because as you know. Private credit and real assets infra business that we have that still has its attraction. So last quarter we had announced Energy Transition fund which is we got the anchor investor from which is a large European investor and now we are raising money on the Energy Transition Fund ETF as we call it. Then as I said we have just launched our performing credit 4 fund ESOP 4 in EAA.
Each of these funds in private markets is a 45 year fund. So by the time you get to. Fund 4 you already spend about 14, 15 years in that business. So building track record is very important. So we have gone through ESOF 3 has been invested and now we have launched ESOP 4 where we have got traction. So as you know we are a multi strategy. Alternative asset manager. So at every year there’ll be couple. Of funds we’ll be raising. So this year it’s energy transition fund ESOP 4 performing as I’ve said we have raised money in an invitation ends in but we are, we have filed for raising money in our transportation in cities so that fundraising should happen. And as we also have other funds. Like our special sits fund which is also three is is getting invested. When that gets over we launch four.
So all that goes on. So we will every I think every three, four months we’ll be launching a. New fund which then goes on for a year and all. So our idea here is that if. You look at last few years we. Have, we have raised about 6 to 8 thousand crores a year. We invested about 7 to 8 thousand crores a year and we have realized or returned about 5 to 6,000 crores a year across our strategies and we hope to continue to grow on that. I think The EFI paying AUM has been growing at approximately 21% a year for the last few years and that is a growth we would hope to maintain.
Prabhav Shah
Thank you for the detailed answer. Like I have one more question like on mutual fund side like you achieved like two new milestones. So one was that equity is now 50% of the total AUM and your SIP book as you mentioned has crossed 500 crore mark with 55% increase quarter on quarter. So like could you share some insights on where is this growth coming from whether it is from tier one or Tier two cities. And like what are you targeting? What is your target equity mix in the next two, three years?
Rashesh Shah
I think as I said, equity AUM we want to continue to grow. Hard to make a forward looking statement in this because you know the industry grows at a particular pace. But I do believe the equity AUM. For the industry should grow at about 14, 15% a year. And we have been growing faster than the industry because we still have a lot of white spaces where we have not opened branches and not activated distributors and all. So we are doing that. We are opening a lot more branches. I think for the first 10 years we maybe had 30 branches. We have added 30 more in the last couple of years. So we are now on an aggressive expansion of that. It coming from all mainly tier 2. And 3 is where there is a lot of growth happening which is where we are opening branches. We always had branches in the larger cities but now we are two and three where we are seeing a lot of growth. So it’s actually across the board and. Equity AUM becoming half of our total AUM was a key milestone and that we want to continue to grow.
Prabhav Shah
Thank you. Thank you so much. That’s it from ahead.
operator
Thank you. The next question is from the line of Siddesh Dharma Adhikari from PL Capital. Please go ahead.
Siddhesh Dharmadhikari
thanks for the Opportunity. Am I audible?
operator
I’m sorry sir, we lost you. Can you please. Yes, now you’re audible.
Siddhesh Dharmadhikari
I’m audible now. Yeah. General Insurance delivered a strong 29% year on year GDPI growth with GWP up 49%. And in Q3 we see GWP stood at rupees 404 crore versus GDP of rupees 350 crore implying higher than usual reinsurance assessments. So what has driven the significant jump? Have we entered any partnership or something like that?
Rashesh Shah
So I think we obviously have been. Expanding, opening, activating more dealers and our direct expansion and all that. But the last quarter growth is, as. You know, after the GST cuts the industry had a big jump, especially auto sales and all. And we are related to auto sales. Plus we’ve been building our market share even in the renewals and all that. So all that effort has come to shape. But I think the key, if you ask me, the key jump has been the auto sales that jumped up post the GST cuts. And as you know our GI business. Is largely focused on motor insurance. We are not very big in retail health. We have made a strategic choice that we can’t do both. They both are very attractive markets. But all our energy and Our focus is on auto and motor insurance. And last quarter, after a few quarters of, you know, very subdued growth, I think motor insurance has also started growing again. Retail health was always growing but motor was stagnating. But now last quarter same motor also has started growing.
Siddhesh Dharmadhikari
Understood sir. And I had one more question. Corporate net debt has remained broadly stable in the quarter. With the consideration received from recently concluded mutual funds chief sales we were expecting to see some downward movement. Can you please explain this and what. Levels we expect FY26 to close at?
Rashesh Shah
So as you say it’s more or less flat because there is also interest. That goes out every year. And last year we closed the mutual. Fund sale only in December. So even that money has come only in December. So I think that interest element and now we have a approximately 6500 crore corporate debt out of which we have. Earmarked 1500 against the office building and property so that we can keep it. Because I think borrowing against office and all is very normal and it is, it pays for itself. So out of that 6500, 1500 is. The value of our Edelweiss house and Koh I Noor house and other property we have. So we earmark 1500 crores of debt against office and other properties. So 5000 is the debt that we. Really have which is against the business that we have. We do hope that between Nero now and the balance value of the stake sale of Nero in the next couple of years, total value should be 1500 to 2000 crores. Eaa. We should get between crores. So between Eaa and Nero it’s about 3, 3 and a half thousand crore reduction. And we are now getting dividend of about thousand two hundred crores in the next two years from the businesses. So if we get about eleven twelve hundred crore dividend plus Nero plus eaa, I think approximately four thousand, four thousand two hundred crores out of that five thousand will be, will be handled so broadly.
I think the 6,500 crore debt we have year marked in that our current. Target is in the next 18 months. To bring this down below 3000 crore out of which 1500 will be earmarked against the property and 1500 will be the real debt. And now we have all the, all. The businesses we own a lot of stakes and as we have demonstrated that good businesses when we want to monetize, it is possible to monetize, we’ll still as I said hopefully own 85% of EAA even after the IPO will own 85% of mutual fund will own 26% of Niro. So all these are also fairly monetizable assets. So that is our math that out. Of this current debt we slowly begin. So we are not concerned about it anymore because the path is very clear to us. We still have to execute. But as I said earlier, what we said one year ago, we have gone. And executed in the last one year. So in the next year or 18 months we will continue to execute on this.
Siddhesh Dharmadhikari
Understood? Thank you so much sir and wishing you all the very best.
Rashesh Shah
Thank you.
operator
Thank you. The next question is from the line of Parth Chariwala from Dam Capital. Please go ahead.
Parth Jariwala
Hi sir. Thank you for the opportunity. So sir, in the, in your comments you mentioned that your FPM has grown 33% YoY growth. So it has delivered a strong growth. Could you share some medium term aspirations on the growth here and what would be the key drivers sustaining this momentum? And sir, second question is that. So I’ve seen your MSME disbursements have grown at a very strong pace of 84% y o y basis. So is there any, some strategic initiatives that you have undertaken for driving this growth? Any new products or geographic expansions or any channel enhancements that you have done here? Those are my two questions.
Rashesh Shah
So on the MSME we obviously, as you know we hired a new MD. Last year in April who was earlier Executive director of Bangkok Baroda has a lot of experience on MSME and we. Had actually staggered our plan to first. Saying we’ll clean up the wholesale book, we’ll bring down the debt which got done last year. So once we reached that point we. Said now we can start growing the MSME business. It would have been also possible to grow MSME aggressively and and clean up the wholesale. But we are very careful. So we did it very carefully. We said let’s do one thing at a time. So that was broadly on the msme.
I think there is a lot of opportunity. We have introduced some new products, we have invested in technology. We opened some 40 branches in the MSME and there are three, four categories. Of MSME and we are still very small but I think we are now. Hitting about 100125 crore disbursement per month. We used to be at about 2530 crore disbursement per month 18 months ago. So it’s a business we maintained for the last few years while we cleaning. Up wholesale and getting a new md. Getting. We have also hired three, four key people out there in the first quarter of the last year and then we have now started scaling it up. So that’s on. What was your other question?
operator
Excuse me Mr. Jariwala. So we couldn’t hear you.
Parth Jariwala
Yeah, it was on the. So what are your medium term growth aspirations there and what are the key drivers? Do you see the momentum sustaining?
Rashesh Shah
So aspiration on alternative EAA is to. Be one of the leading alternatives firm. We already are there with you know, 41,000 crores of fee paying AUM. It makes us pretty large and we are a multi strategy. There are alternative firms which are a single strategy. Some people do only PE or some do only private credit or some do venture debt, some do only equity AIFs. We have about eight strategies in our portfolio. We have dedicated management teams, MDs for all of that. In a lot of our key funds. Flagship funds, we are on third fund and fourth fund now. And this business continues to grow. But each fund is a four five year fund. So our idea is as I’ve said. Our fee paying AUM has been growing at about 21% a year for the last five years. We would like to maintain that because this is a business which can grow without capital.
We don’t need to infuse capital, it throws out capital, now pays dividend to us. But it’s a truly I think unique asset management. If you look at alternatives today the total AUM of alternatives is about 20 lakh crore. The total AUM of mutual fund is about what, 85 lakh crores. So the AUM is about 1 4th but the average profit on AUM is about 3 times. So on a profit pool basis the. Mutual funds profit pool is about close to about 20,000 crore now while the alternative AUM profit is about 15,000 crores. So I think on a profit pool. Basis the alternative market and the mutual fund market as two arms of asset management are becoming fairly equal now. And that is what the excitement is. While mutual fund is a very different. Business, alternatives is a very different business.
And globally you have firms like BlackRock are big in mutual fund while if you look at Blackstone they are very big in alternatives. Globally there are large firms like Blackstone, Apollo, kkr, Carlyle who are all very leading alternative firms. And I think the market in alternatives in India is starting to come. So we are pretty optimistic. We think it’s a 10, 15 year story. To give you an idea, Blackstone started in US in 1984 with I think $100 million fund and they now have close to 1 trillion plus AUM over 40 years. So I think India alternative market should grow There are a lot of other firms which will also come in. There’ll be many players in this industry. But it is a space to watch from, in from a growth point of view.
operator
Mr. Jariwala, any further questions, sir?
Parth Jariwala
No. Thank you so much.
operator
Thank you. We’ll take the next question from the line of Juhi Manwani from Arihant Capital. Please go ahead. I’m sorry to interrupt you. Ma’, am, your voice is breaking. We are unable to hear you clearly. Hello, are you. Ma’, am, your voice is breaking. But still you may try. Okay. So. Ma’, am, I’m sorry to interrupt you. Your voice is breaking. I would request you to kindly rejoin the queue, please and try again. Ma’, am, please rejoin the queue. Thank you. We’ll take the next question from the line of Aditya Makaria from HTSC Securities. Please go ahead.
Aditya Makharia
Yeah. Hi sir. So we obviously heard your plans for ramping up eaa. You know, I just wanted to ask a broad question. What are the timelines for the ipo? I know your DRHP has been filed also. Are you planning any pre ipo, you know, anything on the valuations for the same in whatever discussions you’re targeting with investors?
Rashesh Shah
We have not announced anything. We just filed our drsp, I think. About three weeks ago. So we’ll allow the DRSP process to go on. We have quite a few clients and. Investors who’ve been with us for some time. And the IPO process will be like. A normal IPO process which is in India is usually four to six months from when you file. So we’ll follow the same process. As I earlier also said, this quarter is a very important quarter for us. Jan Feb. March. Because quite a few of our fundraising is going on right now. So I think the IPO we hope will be in about four to six months from now.
Aditya Makharia
Okay. Okay, got it. Second is, you know, this life insurance business, there was a one time GST related expense. What are the mitigation measures we’re taking, you know, to manage this ongoing impact of the GST regulatory changes? And you know, does this also impact our breakeven targets for FY27?
Rashesh Shah
So one is this one time impact was the carry forward, you know, GST. Credit you had which for everybody got extinguished on, on that day. I mean it’s. You can use it up, it can be carried forward. But as a prudent measure we have. Taken a provision against it. So when we, when we use it, it’ll come back in the pnl. But as of now we have said so this is the old GST which was, which was an existing credit ongoingly, as you rightly said. All insurance companies are grappling with this. Because this has been a cost impact. So there are various measures everybody is following. Some are changing product mix, some are changing incentive structures, some are changing what is outsourcing activities to insourcing. Because outsourcing you have to pay gst. So we do feel over two years.
We will be able to mitigate this impact. However, our plans for breakeven remain the. Same because we will calibrate other things and we’ll eke out other efficiency. So we are not changing our breakeven plan. There are good news on the insurance. Front for the industry as a whole is the new insurance bill has been very positive. I think it’s a good step in the right direction. But along with that I think there. Is a lot of movement going on on implementation of ifrs and risk based capital for insurance companies. So ifrs will provide a lot of. Relief on the P and L side because you will be able to, because the income is amortized but your expense is upfronted.
So that will also get partly amortized. So there’ll be some more, some I think balancing of the P and L stress that insurance companies have because of this upfronting of cost. So IFRS will come. Whether it will come in one year or 18 months is the only thing we have to see. But right now it seems like by March 27, IFRS will be rolled out for insurance companies that will be good. For all insurance companies along with ifrs. They will also bring in risk based capital. And as you know, our business in. The life insurance is very heavy on par and non par, what are called traditional savings products. We are not very big on ULEP because we do believe that ULIP is actually much easier sold via banks and maybe customers can do an SIP and a term insurance.
On the other side. Insurance companies obviously provide risk mitigation but also provide investment, you know, an investment service. So the PAR and nonpar are very investment oriented products and we are big in that the RBC will give relief to the current reserving that is there on par and on par for everybody, which is a lot more, you know, conservative. So RBC will be good for insurance. Companies which are used which are very heavy on par and non par, like LIC is also very heavy on par and non par and ones who are not very heavy on ulip. So I think on that basis we. Are hoping that IFRS and RBC happens, but that will be extra for us, our breakeven plans. We remain on the same path as we are now.
Aditya Makharia
All right, so thanks for the elaborate explanation and wish you all the best.
Rashesh Shah
Thank you.
operator
Thank you. We’ll take the next question from the line of Vishal Setia from Bastion Research. Please go ahead.
Vishal Sethia
Hello. Am I audible?
operator
Yes, sir. Please proceed.
Vishal Sethia
So I just wanted to ask regarding the ipo. So how will it unlock value for shareholders? You mentioned unlocking value for employees. So how will it unlock value for shareholders? Can you please mention that?
Rashesh Shah
I think it will unlock value in one way. There’ll be a deterministic value to that stake. We can always use that. We can do many things. We can do spin offs, we can do, we can use that to sell some more and do equity buyback. But unlocking for us is what is. The value as a private company is now visible in the market to all stakeholders. So employees Also, you know, ESOP will. Get unlocked and we will still own 85%. And what we do with that is then stage two. I think stage one is to at least get this value visible and be out there in the market. So that, that is what we mean by value unlock.
Vishal Sethia
Okay, so my second question is on the mutual fund business, how do you hence the growth there, the equity AUM side.
Rashesh Shah
Like everybody else, opening more branches, covering more customers as you’ve seen last five years, it’s a very competitive industry. But we have, I mean it’s a steady state. You make sure. Like our mutual fund is very focused on consistent performance. We want to be quartile one, quartile two consistently. We don’t mind being quartile two also, but we don’t want to slip into quartile. We don’t like fund which is quartile. 1 1/4 and quartile for the other quarter. So our position in market is we are very innovative. We did SIF and we did Bharat Bond. So we come out with new products. Our international funds are also very popular, our global funds. So we do have a lot of innovative offerings. We do focus a lot on performance which is more consistent and stable. I have a very, you know, we don’t have a star fund manager approach.
And along with that we are also. Opening more branches, activating more distributors, adding more customers. So it’s the same, I think steady, bit by bit. To give you an idea, we will not, I think, I don’t know the. Last count of offices we have, but we are not more than 60 offices. A lot of others are 300, 500 offices. Of mutual funds all over India. So we have a long way to go. But I think geographical expansion, product innovation, performance management, all of that are the ways to grow. And as I said, it’s also fortunately an industry where equity AUM should grow at 14, 15% a year. It will be a steady mtm growth of about 6 to 8, 9% and another 6 to 8, 9% coming from new inflows. So I think equity AUM for the industry conservatively should grow at 15% a year. And we are smaller, we have a lot more space to cover. Plus hopefully we are more agile, more innovative to get that little bit of being able to grow a little bit faster and that is good enough for us.
Vishal Sethia
So on the arc business side.
operator
Sorry to interrupt you Mrs. Sitia. I’m sorry to interrupt you sir. I would request you to kindly rejoin the Q for follow up questions. Thank you so much. We’ll take the next question from the line of Sriansh from IIFL Capital amc. Please go ahead.
Shriyansh
Yeah, hi, thank you for the opportunity sir. Just couple of questions. Can you please give some updates on the equity yields in the mutual fund? Like have we seen any improvement this quarter or something and also like what are the key levers you are focused on to drive further yield enhancement from here on?
Rashesh Shah
So as I said earlier, I think. We are obviously focused on performance. Expanding our distributor reach, expanding folios direct customers. Also now we have us cover a lot of the institution and corporates and all directly. So it’s a, it’s, it’s actually the same old thing that everybody has to do. We are smaller, we are more agile. We are more focused on innovation continuously like some few. A few months ago, you know the SIF category came out. We were one of the early movers on that. We had everything ready at the back end. We worked six months before the actual notification came out. We were quick to launch in our SIF itself has now got more than 2000 crores of AUM and it’s been three months but we have scaled it up in that we have a gold and silver fund that has been doing well thanks to gold and silver.
So I think our products are innovative. Our performance, we try to make it as consistent as possible which we have seen. And we are small and we have a lot of ground to cover, even distribution. We have not even covered a large part of the market that is also available to us. So there is a lot more room out there. It means steady investment, management, bandwidth, all of that and we are continuing to do that and I think our franchise with the distributors is also improving as our performance is consistent, as our scale is going up. We’re also investing a lot in managing distributor relationships, managing their needs also. So I think it’s a combination of all that. And we do think that, as I. Said earlier, the equity AUM for the industry as a goal as a whole should grow at about 14, 15% a year. So we should continue to plug away that.
Shriyansh
All right, sir, have you seen any improvement this quarter in our field.
Rashesh Shah
In.
Shriyansh
In equity yields of army children?
Rashesh Shah
Yeah, I think as our, as some. Of our funds have been doing well, which are having higher yield. So we are seeing an inching up. Of the yield and I think the idea is to continue to maintain that. We are in the 30s in our retention ratio and we have got to ask quite a bit of room to grow in that also. But idea is to add value to the customers, to the distributors and then enhance yield. The first two have to come before you start only working on yield. So we are fairly patient and I think this, the, the curve is upward on our average yield, average retention rate, you know, over the years. And if you see our results, that is also showing the growth. But we want to do that only. By adding value to customers and distributors.
Shriyansh
All right, answer on the ARC business has our business has continued to report steady profitability, which is increasing, but however, the equity levels have declined sequentially. So is this because of any dividend payouts or like, is it because of dividend payout or something? And if. Yes. So can you quantify it like what is the amount or anything?
Rashesh Shah
Yeah, so the ARC business, as you know, the Capital adequacy is 85% which. Is, you know, ridiculously high as you will admit. So they have a lot of excess capital, excess liquidity. They have almost any at any point between 500,000 crores of cash on hand. So the board of ARC has also been working on, by our calculation, they have about 1500 crores of excess capital. They have 3000 crores equity. They need only 1500. So they have been dividending it out to the extent possible so that they can rationalize their equity. They have to become lean on their. Equity side, which will improve ROEs and all that because currently that extra capital is a drag on roe.
So they have been working on that and the steady profit is there because a, the equity is there plus the. Old AUM is there. The acquisition of new AUM has been slow. I do believe it will take another. Year or 18 months for ARC industry as a Whole to start growing with new acquisition. Because the NPAs in the banking system and NBFCs is not as large as it was a few years ago. So ARC you must understand is a very cyclical industry. There are seven, eight, nine year cycles. So I think from 2013 to 2020. Was an acquisition cycle. There were a lot of NPAs you could buy NPAs you had to deploy capital. I think from 2020 to maybe 2728 is going to be a recovery cycle where those AUM you will resolve them, recover them, restructure them and bring it out.
And then again maybe another acquisition cycle will start. I don’t think the NPAs are going. To get very bad. But we are seeing growth of assets in mortgages, in msme, in retail and ARC is also developing expertise in those areas. Last round most ARC expertise was on large corporate loans. You know, one big power plant and steel plant and all. Now we also have actually developed a retail MSME expertise on NPA and the industry is also done. So there is a lot of growth that may come in those areas also. But ARC will always be cyclical because. Banking NPAs will always be highly cyclical. You should be patient. So when the industry is in down cycle you will have excess capital. When it goes in upcycle, you can. Always raise more capital.
Shriyansh
Okay, but sir, as you earlier indicated that this business has surplus equity. So how we are going planning or something to optimize these equity levels going. Forward.
Rashesh Shah
So they don’t retain too much equity and you know they don’t retain too much equity. So whatever profit they make, they try. To dividend it out every quarter. So it is good for the shareholders. Also good for edelweiss also because it helps us with our corporate debt and others. So they will do everything that is. Available via dividending it out and all to pay back the excess capital to the shareholders. They need about 1500 for the current. Expected business for the next two, three years. But they also generating profit every year, right? You must have seen they are at about 75 crores a quarter. So whatever they are generating their dividending out.
Shriyansh
Okay sir. All right, thank you so much.
operator
Thank you. We will take the last question from Sujal Chandalia from Walford pms. Please go ahead.
Sujal Chandaliya
Yeah, hi sir, thank you for the opportunity. I got a couple of questions from my side. Firstly, over the last five years we have seen a shift in our FP AUM mix towards real estate and infrastrategy from 9% in March 2020 to 52% in December 25, can you please throw some light around it and what kind. Of sub strategies currently we have and. Similar what are our future plans around this?
Rashesh Shah
So yeah, I think now on FP aum, I think you have highlighted a very important point. On FP aum we are half private. Credit and half in real asset. A lot of people see this as a private credit business which is where we started. But in the we started our private. Credit in 2011 in EAA and we started our infra in 2017. So the what we call real asset, it’s real asset and infrastructure assets. In our real asset we have, we have three verticals currently. One is an what you call transportation. Vertical where we have roads. One is our energy vertical where we. Have transmission line and renewable energy. And one is our commercial real estate where we have office buildings and all.
And each of these verticals are many other asset classes. Like in transportation vertical you can add warehouses and you can add airports and ports and many other things. Anything that helps transport of people and goods is the transportation vertical. And assets which have a steady cash flow. So we buy only operating assets. We don’t take greenfield risk. We just try to make sure that there is a fair amount of fraternity around cash flow. Our energy vertical has, we have some transmission lines and we have renewable energy. And the third one is our commercial real estate which is our office RIP fund. So this is. And then we have invits and Also. We have one invitation and one other getting launched CTs. So I think there has been a growth in that. What happens in private credit is though that has also been growing in private credit.
We also been repaying to our investors because these are yield funds. So every time the yield comes you. Repay it back to the investors. And unlike a private equity fund which for eight years has a lot of. Internal growth, AUM growth, a private credit fund usually is a four to four. And a half year cycle. So it gets churned very fast. Plus you end up paying back a lot of inflows to your investors. So private credit has also grown but. Our infra and real assets have grown faster. And we are very happy because they are three strategies is in private credit we have, there are three strategies. In real assets we have. So on the whole it’s. It’s a pretty good mix.
Sujal Chandaliya
Okay. Okay son. Also recently there was a news article about Edelweiss AMC being one of the contenders to acquire PGIM’s India AMC business. So you can so can throw some light around this. And are we exploring any inorgan growth opportunities.
Rashesh Shah
We are always exploring inorganic growth opportunities. I think we did put in a bid, but we believe there are other. Higher bidders out there at a higher price. So I think we are always very conservative because unlike a lot of other people who have to buy, we can also build. So our capital can either be used. For build or buy. And we look at both. I think if it’s a good strategic fit, as you know, Edelweiss in its history, 25 years ago, we acquired Rational. Securities, which become our intrusion broking business. We acquired Anagram, which became our mass affluent wealth management business. We acquired Forefront, which became our, you know, alternatives, part of our alternatives business. So we have acquired companies. We acquired JP Morgan Asset Management, which is part of our amc. So we have done about four or. Five acquisitions in our, in our so. But we have grown organically also and we have the capability to do both. We will always do acquisition not for. Quick growth, but for strategic sense if it’s a bolt on acquisition. So we do look, look at opportunities. All the time and we have a. Team that evaluates it. And if you find the right one. We will always be looking for inorganic growth opportunities.
Sujal Chandaliya
Okay, thank you for your answer and all the best for future.
operator
Thank you. As that was the last question for today, I would now like to hand the conference back to Ms. Priyadeep Chopra for closing comments. Thank you. And over to you, ma’. Am.
Priyadeep Chopra
Thank you, Michelle. Thank you Rashesh for the insightful answers and thank you all for your time today. Been a joy to have you all and listen in to your questions. Please do write in to us at Edelweiss Investor Relationships for other questions and feedback and additional information. Thank you all and have a great day ahead.
operator
Thank you, members of the management, Ladies and gentlemen, on behalf of Edelweiss Financial Services, that concludes this conference call, we thank you for joining us and you may now disconnect your lines. Thank you.