JC Flowers Aims to Build on $1.4 Billion India Bad Loans Buy
Wall Street dealmakers are being drawn to one of the world’s fastest-growing economies, which is seeing a surge in credit growth.
(Bloomberg) -- JC Flowers & Co. will continue to hunt for deals in India after the private equity firm recently pulled off its biggest deal in the country by buying a portfolio of bad loans.
“India seems like it’s in a nice spot,” Chris Flowers, Chief Executive Officer of the New York-based firm, said in an interview. JC Flowers, which invests purely in financial services companies, is looking for other opportunities in the sector apart from non-performing assets, he added.
Wall Street dealmakers are being drawn to one of the world’s fastest-growing economies, which is seeing a surge in credit growth. In particular, global investors have been attracted to opportunities for out-sized fees in the resolution of soured loans in India under so-called asset reconstruction companies, though that appetite might be cooling.
JC Flowers’ ARC, which was set up several years ago, completed its purchase of Yes Bank Ltd.’s 480 billion rupees ($5.9 billion) soured loans portfolio for 112 billion rupees last month, the country’s single biggest sale of such assets so far.
“We hope to make it into a larger, more successful platform over the next five years, and we’re seeing a lot of tailwinds,” Flowers said, referring to the Yes Bank deal where the firm was the top bidder.
Flowers was actively involved in the transaction and made many trips to India, helping push the process across the line, according to a person with knowledge of the matter. When reached for comment about his involvement, Flowers said he took a great deal of interest in the transaction.
The Yes Bank portfolio will be managed by New York-based Thierry Porte, the firm’s vice chairman and managing director, and there are no plans to set up an India office in the near future, according to Flowers. The team in India includes Akash Suri, group president and national head of Yes Bank’s asset reconstruction and management, he said.
“Over the decades, we have seen the cycles in banks,” Flowers said. “We were involved with NPL transactions in Japan, the US and other countries, so cleaning up these loans is a process we have done a lot of times.”
The Yes Bank’s stressed-loan portfolio comprises significant real estate and infrastructure assets, and could need a fund infusion of around 20 billion rupees, Prashant Kumar, CEO of the Mumbai-based bank, said in an earlier interview with Bloomberg News. Flowers declined to comment on the amount of funds required, though he said some assets within the portfolio may need extra financing.
“Our aim is to maximize the return for our investors,” Flowers said. The firm bought the Yes Bank portfolio through its latest fund J.C. Flowers V LP, which closed with $1.1 billion of investor commitments in August, he said.
Two parties in the fund also co-invested in the deal, he said. They were Lingotto, the firm that manages investments on behalf of Exor NV, and G2S2 Capital Inc., an investment firm of Canadians Simé and George Armoyan, according to Flowers.
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