Deal Closed | Edelweiss Dynamic Growth Equity Fund | Setting up of Domestic Category III fund

The details of the deal are as follows;

Sector: Financial Services –Category III Alternative Investment Fund 

Announcement Date: Press Announcement | 8 February 2021  

Completion Date: 8 February 2021 

Name of Client: ESL Securities Limited. ESL Securities Limited is a wholly-owned subsidiary of Edelweiss Securities Limited. 

Deal Description: Advised ESL Securities Limited in relation to setting up of a Category III alternative investment fund (“AIF”), namely Edelweiss Dynamic Growth Equity Fund (“Fund”). The Fund’s investment strategy will be a two-pronged approach with the intention to generate long term capital appreciation. To achieve its objective, the Fund will have two kinds of portfolios, i.e., long term portfolio to invest in cash equities and debt securities with an aim to generate long term returns; and trading portfolio to take long or short positions through any available instruments including but not limited to stock and index derivatives including futures and options and Stock Lending and Borrowing Mechanism (SLBM); to generate optimal returns. The Investment Manager may also use stock and index derivatives including futures and options to hedge the portfolio from time to time. The Fund may also participate in special situation trades like IPOs, warrants etc. 

We also provided regulatory and legal advice to the Client in relation to the fund structuring. 

Total Consideration: NA. The Fund is an open-ended long-short equity fund. The Fund targets to raise INR 1,000 crore (about $137 million). 

Team Members: Siddharth Shah (Partner), Vivek Mimani (Partner), and Ishita Khare (Associate)  

Role of Firm: Lead Counsel to the Fund. 

Other legal advisors if any with names of Lead Lawyers: NA

Unique Feature of Transaction  

The Fund plans on capitalising on market dynamics by participating in both long and short side opportunities. The instruments that the fund would invest in consists of cash equities, stock, and index derivatives — including futures and options. The Fund will follow a target-based investment approach and employ complementary strategies to smoothen returns across market cycles while limiting drawdowns during periods of extreme volatility.