Mumbai-based stressed asset investor Eight Capital Management and London-headquartered Emso Asset Management on Thursday announced the acquisition of a 47.5% stake in Ambit Flowers Asset Reconstruction Co. Pvt. Ltd.
The duo has bought out Indian asset manager Ambit Pvt. Ltd’s shareholding in the asset reconstruction company for an undisclosed amount.
The new entity will be renamed JC Flowers Asset Reconstruction Company (JCFARC) once the transaction is completed, according to a statement.
New York-based JC Flowers, one of the world’s largest distressed asset investors, had formed the ARC with Ashok Wadhwa-led Ambit in early-2016 to invest in Indian distressed asset market. JC Flowers and Ambit held a 47.5% stake each in the ARC.
Earlier this year, VCCircle reported that Ambit was set to sell its stake in the joint venture.
With the new ownership, the ARC will be managed by Eight Capital's team in Mumbai. It intends to buy non-performing loans from Indian banks and turn around target companies by restructuring their balance sheets and infusing fresh capital
JCFARC anticipates acquiring loans with its own capital as well as on behalf of investors.
"JC Flowers has an established past track record of turning around troubled firms with large pools of NPLs [non-performing loans] which we expect will translate into a substantial advantage for our business," said Ravi Chachra, chairman of Eight Capital.
"In addition, Emso will bring its vast experience of investing in emerging markets across geographies and sectors to strengthen the partnership," he added.
Emso, a hedge fund focused on emerging markets, is a specialist asset manager handling assets worth around $5.8 billion globally. It has been looking to enter India’s growing distressed assets and restructuring market along with its Indian partner Eight Capital since last year. Eight Capital was co-founded in 2005 by former Deutsche Bank and JP Morgan executive Ravi Chachra.
Ambit Flowers ARC, which started operations in 2017, had planned to raise up to $1 billion from global investors to invest in distressed assets under insolvency proceedings. The ARC was looking at $150-250 million in the first tranche, according to media reports in 2017. It was looking at deals with a ticket size of up to $50 million and was targeting 10 to 15 transactions.
The ARC managed to close a small deal, buying an asset in the small and medium enterprises (SME) segment from private-sector lender DCB Bank and exited it with a profit.