JC Flowers teams up with Ambit for Indian stressed assets

Indian asset reconstruction companies have added approximately $6 billion in assets under management on the back of key regulatory changes in the last 24 months and JC Flowers is the latest foreign manager to jump into the sector.

US private equity firm JC Flowers Asset Management has teamed up with the Indian investment bank Ambit to target stressed assets in India. 

The two are launching an asset reconstruction company (ARC) called Ambit Flowers Asset Reconstruction. Ambit and JC Flowers will each hold a 47.5 percent stake in the company with the remaining 5 percent controlled by Jerry Rao, former Citi banker and entrepreneur. 

Ambit Flowers will target mid-cap companies across different sectors in India. Both Ambit and JC Flowers will contribute $8 million each of the company’s seed equity of $17 million. The $1 million balance will be provided by Jerry Rao. The ARC will typically look at $20 million-$50 million deals and will focus on supporting and investing in stressed companies, rather than selling off the assets of distressed firms, according to a report in the Times of India

The two major parties also plan to raise a fund from third party investors alongside the ARC joint venture. The firms will seek a $100 million in initial commitments from institutional investors, family offices and high net worth individuals in and outside India, the report added.

“The Indian banking system is strained due to significant amount of stressed assets. The RBI [Reserve Bank of India] amendments, recent budget announcements and the positive dispensation of the government will create a mature distressed assets market in India. In partnership with JC Flowers Asset Management, we believe we can successfully turn around stressed businesses in India,” said, Rahul Gupta, joint group chief executive of Ambit Holdings.

The distressed asset industry in India is gaining traction on the back of deteriorating asset quality of Indian banks and regulatory push from the RBI. ARCs have increased their assets under management by approximately $6 billion on the back of key regulatory changes in the last 24 months, according to a statement by Ambit.

The venture will be led by Rahul Gupta and David Moffitt, managing director and head of JC Flowers Asset Management.

Ambit Group is an investment bank offering corporate finance, private equity, asset management, wealth management, institutional equities and structured finance services.

JC Flowers Asset Management is the fixed income platform belonging to private investment firm JC Flowers & Co.