Eight Capital to sell stake in JC Flowers ARC to JC Flowers -; Co

21 Sep 2022 , 07:57 AM

According to news reports, global private investment firm JC Flowers & Co would buy out Eight Capital’s whole stake in the JC Flowers Asset Reconstruction Company (ARC), just as Yes Bank prepares to purchase a 20% equity stake in the ARC.

Eight Capital, a fund run by Ravi Chachra that specializes in troubled enterprises, has already sold the US private equity company 22% of the ARC for Rs50 crore. One of the reports added that JC Flowers will now pay Rs60 crore to purchase the remaining 10% that Eight Capital holds.

A three-party joint venture, JC Flowers ARC, with initial stakes from Eight Capital of 35%, London-based hedge fund Emso Asset Management of 15%, and JC Flowers & Co. of 50%. Due to the fund’s failure to purchase shares following the ARC’s rights issue three months prior, Eight Capital’s position decreased to 32%.

The deal for the distressed loans was initially actively being pursued by Chachra, who was the managing director of the ARC at the time, for a year. However, after his departure, Gupta took the lead in finalizing the agreement, according to reports.

The sale of Yes Bank’s troubled loan portfolio to JC Flowers ARC, which placed the highest bid at an uncontested Swiss auction that ended on September 7, received board approval on Tuesday.

As part of the agreement, Yes Bank would inject Rs350 crore in capital to purchase a 20% share in the ARC. Under the 15:85 arrangement, the bank will sell the debt for Rs11,183 crore. The ARC will pay 15% of the whole cost, or Rs1,677 crore, upfront, and will issue security receipts for the remaining 85%, which will be due upon loan recovery.

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