Mumbai: J.C. Flowers and Co. is looking to buy out partner Ambit Holdings Pvt. Ltd in their asset reconstruction joint venture, two people aware of the development said, in the latest instance of a foreign private equity firm betting big on the distressed assets opportunity in India.
In early 2016, the New York-based PE firm had tied up with Ashok Wadhwa-led Ambit Holdings to acquire stressed assets in India through an asset reconstruction company (ARC) called Ambit Flowers Asset Reconstruction. J.C. Flowers and Ambit hold 47.5% each in the ARC while entrepreneur Jerry Rao holds 5%.
“J.C. Flowers is bullish on the distressed assets opportunity and they would like to do more. So far, they haven’t done much in India through the JV. They believe that doing it on their own will give them a better chance and they are currently negotiating buying out Ambit from the JV," said one of the two people cited above, requesting anonymity as he is not authorized to speak to reporters.
J.C. Flowers is also raising a fund to invest in distressed assets and is expected to make a first close soon, this person said.
“They are in advanced stages of talks with a few limited partners for making a first close of around $150 million for an offshore distressed fund that they are raising," the person added.
In February, K.M. Jayarao, executive vice-chairman at Ambit Flowers Asset Reconstruction, told DNA newspaper that the firm was looking at raising a $250 million fund to acquire stressed assets in India and was in talks with investors across Japan, Singapore and the US.
J.C. Flowers and Ambit declined to comment on the development.
Founded in 1998 by J. Christopher Flowers, J.C. Flowers & Co. has invested nearly $15 billion, including co-investments, in 51 portfolio companies across 17 countries. The firm’s investments have largely focused on the financial services sector. Its move to focus on the India opportunity on its own comes at a time when the interest of foreign investors in India’s bad loan opportunity seems to be on the rise.
On 10 September, Mint reported that London-based emerging markets hedge fund Emso Asset Management Ltd, which manages $5.8 billion in assets worldwide, is entering India’s growing corporate restructuring market. Emso will partner with Mumbai-based distressed assets investor Eight Capital Management LLC, which was co-founded in 2005 by former Deutsche Bank and JP Morgan executive Ravi Chachra, Mint reported.
Last month, Aditya Birla Capital Ltd (ABCL), the financial services arm of Aditya Birla group, announced a joint venture with US-based alternative assets manager Varde Partners to invest in distressed assets in India. In an interview, Ajay Srinivasan chief executive officer of Aditya Birla Capital, said Varde Partners will come on board as an equal joint venture partner in ABCL’s newly incorporated ARC, for which it received Reserve Bank of India approval in September last year.