Edelweiss Capital Ltd 2 1a432m

INTRODUCTION Edelweiss is one of the leading financial services company in India. Its current businesses include investment banking, securities broking, and investment management. It provides a wide range of services to corporations, institutional investors and high net-worth individuals. Evolution of the company: The Edelweiss Group is a conglomerate of 31 entities including 28Subsidiaries and 2 Associate companies, engaged in the business of providing financial services, primarily linked to the capital markets. It operates from 43other offices in 19 Indian cities. Since its commencement of business in1996, it has grown into a diversified Indian financial services company organized under agency and capital business lines operated by the Company and its thirteen subsidiaries. The Managing Director and C.E.O of the company is Mr. Rashesh Shah. Edelweiss Capital Limited(www.edelcap.com), incorporated in 1995, today has emerged as one of India’s leading integrated financial services conglomerates. The Edelweiss group offers one of the largest ranges of products and services spanning varied asset classes and diversified consumer segments. Its businesses are broadly divided into Investment Banking, Asset Management, Broking Services and Loans. The company’s research driven approach and consistent ability to capitalize on emerging market trends has enabled it to foster strong relationships across corporate, institutional and HNI clients. Edelweiss Capital Limited employs over 1500 employees, leveraging a strong partnership culture and unique model of employee ownership.

HISTORY The Company was incorporated on November 21, 1995 as a public limited company. Company received its certificate for commencement of business on January 16, 1996. The Company commenced investment banking activities and ed with SEBI as a "Category I Merchant Banker" (as defined under the Securities and Exchange Board of India (Merchant Bankers) Rules, 1992) and thereafter as a "Portfolio Manager" (as defined under the Securities and Exchange Board of India (Portfolio Managers) Rules, 1993) and as an "underwriter" under the Securities and Exchange Board of India (Underwriting) Regulations, 1993. The company entered the business of securities broking in the year 2002 by acquisition of Rooshnil Securities Private limited which later changed to Edelweiss Securities Private Limited and is presently known as Edelweiss Securities Limited. The year 2004 witnessed the foray of the Company into the businesses of insurance advisory as well as commodities broking and trading. The business of insurance advisory is carried through the subsidiary, Edelweiss Insurance Brokers Limited. The subsidiary, ECAL Advisors Limited carries on the business of commodities broking and trading. The Company also has its presence in non banking financial activities through its subsidiaries, Crossborder Investments Private Limited (acquired in the year 2000) and ECL Finance Limited (incorporated in the year 2005) which are NBFC’s. Edelweiss Real Estate Advisors Private Limited, which was previously their subsidiary and their subsidiary Edelweiss Trustee Services Private Limited, were incorporated in the year 2006, for launching the company’s first real estate fund which was ed with the SEBI as a "Venture Capital Fund" (as defined under the SEBI (Venture Capital Funds) Regulations, 1996)

The Company raised funds through private equity from Connect Capital Holdings in the

year 2000. Greater Pacific Capital (GPC) concluded a strategic investment in the Company in October 2005. Apart from fresh Investment in the Company, GPC also bought out Connect Capital Holdings’ stake in the Company, thereby taking its equity stake to 20%. The Company also attracted capital from Galleon Diversified Fund, Heliconia Pte Ltd (which is currently a wholly owned subsidiary of GIC (Ventures) Pte Ltd held through a wholly owned subsidiary Lathe Investment Pte Ltd), BIH SA and Shuaa Capital in 2006. Recently, investment in the company was made by Lehman Brothers Netherlands Horizons BV and Galleon Special Opportunities Master Fund Limited – Galleon Crossover Segregated Portfolio. The Company does not have any strategic or financial partners.

Capital business lines Treasury. Company’s internal treasury operations manage their excess capital funds. The company do so by investing their capital in what they believe to be low-risk strategies, maintaining positions which we can liquidate economically within a few days. They structure their treasury investments to maintain sufficient liquidity in their portfolio to the capital needs of their other businesses. Wholesale Financing.

The company recently entered the wholesale financing business to provide their high net worth individual and corporate clients with loans against shares (including promoter financing), loans to finance subscriptions of IPO shares and loans against mutual fund units. They employed approximately 843 full time employees as of June 30, 2007, including 40 research professionals. In fiscal 2005, 2006 and 2007, their consolidated total income was Rs. 770.5 million, Rs. 1,580.0 million and Rs. 3,712.5 million, respectively. In fiscal 2005, 2006 and 2007, their consolidated profit after taxation and minority interest was Rs. 224.8 million, Rs. 405.5 million and Rs. 1,090.1 million, respectively.

ORGANIZATIONAL STRUCTURE The Board comprises of ftheir independent and two non-executive directors out of a total of eight directors, each of whom brings in his own expertise in diverse areas. The focus is on strong corporate governance. There is an Independent Risk Committee headed by an external director.

BOARD OF DIRECTORS The Board comprises of ftheir independent and two non-executive directors out of a total of eight directors, each of whom brings in his own expertise in diverse areas. The focus is on strong corporate governance. There is an Independent Risk Committee headed by an external director. Financial Performance at a Glance Edelweiss over the past few years has delivered strong operating and financial performance. It has a strong track record of high growth and profitability. Our revenues have grown at a 4-year CAGR of 149% while our net profits have increased at a 4-year CAGR of 143% . Edelweiss

Group Net worth stood at over Rs. 23 billion including minority interest, indicating a strong balance sheet. Equity capitalist the primary source of funding for the company besides debt. The leverage as on 31st March 2008 is below 1:1 indicating the healthy position where by the balance sheet can be further levered easily for improving the ROEs

Business Overview Edelweiss operations are broadly divided into Agency and Capital business lines. The strategies employed ensure that the divide would broadly remain equal among the two. The Agency business line includes Investment Banking, Broking - both Institutional and HNI, Asset management and Investment advisory services. The Capital business line includes Lending and Treasury Operations,

Investment Banking Edelweiss has one of the most extensive product offerings within Investment Banking in India, catering to different market and client segments. The verticals within Investment Banking include Equity Capital Markets, Mergers &Acquisitions Advisory, Private Equity Syndication, Structured Finance Advisory, Real Estate Advisory and Infrastructure Advisory.

Broking Institutional Equities Edelweiss has one of the leading institutional equities businesses in India backed by a large and experienced research team and a large and diversified client base Intense servicing, seamless execution and innovative research products have helped Edelweiss build strong relationships with over 300 institutional investors, including FIIs and domestic institutional investors. Research coverage presently extends to over 200 companies across 19 sectors.

Private Client Broking Edelweiss offers dedicated brokerage services to high net-worth individuals with a strong emphasis on building long-term relationships with clients. Product offerings include specialized trading execution for active trading clients and structured products like equity linked capital protection products.

Wealth Management The Primary focus is on understanding each HNI client's profile including lifestyle, risk appetite, growth expectations, current financial position and income requirements to create comprehensive and tailored investment strategies. Edelweiss offers customized products along with practice models and advisory teams specializing in servicing the underserved NRI segment. The broad range of offerings includes asset allocation advisory to Structured Products, Portfolio Management, Mutual Funds, Insurance ,Derivatives Strategies, Direct Equity, Private Equity, and Real Estate Funds etc

Asset Management Alternative Asset Management focuses on advisory/management expertise for Private Equity Fund, India focused Multi-Strategy Fund, Real Estate Fund and a Bonds Fund. Recent Initiatives that have been announced include setting up an ARC and a Distressed Assets Fund. On the Domestic AMC side, Edelweiss Mutual Fund has launched two Debt Funds, one Liquid Fund and one ELSS Fund.

Treasury The Treasury Operations in Edelweiss is similar to that of a Treasury in a Commercial Bank and focuses on liquidity management and yield optimization. This division has adopted a multi strategy/multi-book approach to diversify and grow its portfolio while imparting liquidity in the balance sheet. The Company follows a disciplined and conservative approach to cash management with emphasis on strong risk policies and capital preservation.

Lending With a deep knowledge and understanding of capital markets, the Company’s primary offering in the lending business includes products such as promoter funding, loan against shares, IPO financing, Loan against ESOPs etc. It’s prudent financing norms and a conservative margin of safety ensures low or nil non performing loans.

Financial Products Distribution

Among the recent initiatives, Financial Products Distribution focuses on giving advice and analyzing the best financial product options available in the market. It involves the distribution of the full range of third party financial products and services for the retail customer

HIGHLIGHTS EBL has a strong equity research team, which covers approximately 50 6 0 companies within 6 industry categories, with a focus on large and medium capstocks.

The company’s Equities Broking division has now expanded to include 215stocks in 19 sectors ing for 70 percent of market capitalization

Alternate Asset Management’s total asset value currently stands at $625 million

Wholesale Financing division soared to Rs. 141 crore in FY08 from Rs. 7 crore inthe previous year

Edelweiss is amongst the largest institutional broking firm, enjoying a healthy5% plus market share in the institutional broking segment

Edelweiss is also in the process of widening its product portfolio by penetrating into product specific and sector specific nieches which will broaden and strengthen its institutional business.

Asset base of over INR 800 cr. In lending business

It is emled with over 40 leading FIIs, FIs, Mutual Funds, Banks andInsurance companies

Awarded as “Best Merchant Banker” by the Outlook Money NDTV Profit Awards,2008 Ranked among the top ten players in Annual Bloomberg and Annual Thomson-Reuters Present Chairman and CEO- Mr. Raskesh Shah Well respected Brand with strong position in relevant market segment has an integrated business model ,which specializes in providing a wide range of financial products and services such as investment banking equities, wealth management, and wholesale finance is well positioned to leverage the growing financial sector in India and become a significant market player, especially in areas like investment banking, institutional equities etc. Has a strong research platform with research products, such as fundamental and alternative research, catering to institutions and HNWIs and retails. The fundamental

Objective of edelweiss capital ltd The objects of this Issue are to raise funds to (i) enhance their margin maintenance with stock exchanges; (ii) establish additional offices and acquire office infrastructure; (iii) enhance their existing technological capacity; (iv) prepayment of loans; and (v) achieve the benefits of listing of the Equity Shares of our Company on the Stock Exchanges. The main object clauses of the company’s Memorandum of Association of their Company and objects incidental to the main objects enable us to undertake our existing activities and the activities for which funds are being raised by us through this Issue. They propose to meet all the requirement of funds entirely from the proceeds of the Issue and, therefore, no amount is required to be raised through means other than the Issue for financing the same. Accordingly, Clause 2.8 of the SEBI Guidelines (which requires firm arrangements of finance through

verifiable means for 75% of the stated means of finance, excluding the amount to be raised through the proposed issue) does not apply to the Issue. The fund requirement and deployment are based on internal management estimates and have not been appraised by any bank or financial institution. These are based on current conditions and are subject to change in light of changes in external circumstances or costs, or in their financial condition, business or strategy, as discussed further below. their management, in response to the competitive and dynamic nature of the industry, will have the discretion to revise its business plan from time to time and consequently their funding requirements and deployment of funds may also change. This may also include rescheduling the proposed utilization of Net Proceeds and increasing or decreasing expenditure for a particular object vis-à-vis the utilization of Net Proceeds. In case of variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other purposes for which funds are being raised in this Issue. If surplus funds are unavailable, the required financing will be through their internal accruals and/or debt. The entire requirement of funds as set out above will be met through the Net Proceeds. In the event that estimated utilization out of the Net Proceeds in a Fiscal year is not completely met, the same shall be utilized in the next Fiscal year. We undertake that the Net Proceeds will not be deployed towards their commodities trading and commodities broking business.

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