Edelweiss Alternative Asset Advisors has raised Rs 3,400 crore (about $ 425 million) in its third Special Situations Fund (ISAF III).

The fund focuses on asset-heavy companies that have a strong turnaround potential and it invests in situations where resolution of asset requires capital and domain expertise.

Edelweiss, in a BSE filing, said it has commitments from global investors that include large insurance companies, pension funds, high net worth individuals and family offices from India. The fund aims to raise $1 billion with a green-shoe option of $500 million.

ISAF III has invested more than Rs 1,000 crore in in two special situation opportunities and it has a strong pipeline of opportunities in this space.

Amit Agarwal, head, special situations strategy, said the fund assists companies looking for specialised financing solutions to turnaround their fortunes.

The fund assists financial institutions looking to sell/ resolve their portfolio assets. Investors in special situation strategy can generate high returns, akin to equity, while mitigating downside risk as large part of fund investments that are made in the nature of covenant-heavy credit instruments.

Special Situations Strategy Fund (Series II), which had raised funds in 2018, has invested more than Rs 10,500 crore across deals and exited several transactions to realise more than Rs 9,500 crore from portfolio companies.