JC Flowers, Ambit form India stressed asset JV
US-based private equity firm J.C. Flowers will form a joint venture with India's Ambit Holdings to buy stressed assets in India.
J.C. Flowers and Ambit will each hold a 47.5% stake in the proposed asset reconstruction company (ARC), to be called Ambit Flowers Asset Reconstruction. Indian serial entrepreneur Jerry Rao will hold the other 5%. The parties have signed the shareholder agreement and are currently applying to regulators to begin operations.
In addition to the ARC, Ambit Flowers will also maintain a distressed debt fund; the two vehicles will have a combined corpus of $100 million, Ambit CEO Rahul Gupta told VCCircle. Ambit Flowers will seek significant equity stakes in small to medium-sized enterprises, with a goal of rebuilding the companies and taking them to a profitable state.
The company will be led by Ambit's Gupta and David Moffitt, a managing director at J.C. Flowers. Prior to joining Ambit, Gupta was CFO at Tokyo-based Shinsei Bank; J.C. Flowers was among the investors who acquired Shinsei in 2000, and continues to be a key shareholder in the company today.
Ambit Flowers' launch comes amid efforts by Indian banks to rid themselves of non-performing loans. The Reserve Bank of India (RBI) recently estimated that the country's banks collectively have more than INR7 trillion ($110 billion) in distressed debts on their books. J.C. Flowers and Ambit expect to see numerous investment opportunities as the RBI and the government encourage banks to dispose of these assets.
J.C. Flowers focuses on global financial services investments, and has been active in Asia for nearly 20 years. Among its recent investments is an agreement to buy the Australia and Japan businesses of equity trading platform Chi-X Global Holdings, along with the company's technology services unit based in Hong Kong. It is also an investor in India's SICOM, having paid INR3.5 billion in 2007 for a 36% stake.
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