The International Finance Corporation (IFC), a member of the World Bank Group, has proposed to make an investment of up to $100 million into the JC Flowers India Opportunities Fund, a joint distressed asset investment fund by US-based PE firm JC Flowers and Indian investment firm Eight Capital.
Along with the equity investment in the fund, which is targeting to raise a total corpus of $500 million, IFC is also looking to make an equity investment of up to $4 million in local currency in JC Flowers Asset Reconstruction Company (JCF ARC), which is also co-owned by J.C. Flowers and Eight Capital.
The company, which was previously known as Ambit Flowers Asset Reconstruction Company, was renamed after Eight Capital and hedge fund Emso Asset Management bought out Ambil Capital’s 47.5% holding in the company, leaving existing shareholder J.C. Flowers as the largest shareholder in the firm.
Following the deal, Eight Capital, which invests in distressed and special situation opportunities in India, has teamed up with J.C. Flowers, which has invested more than $17 billion in 56 companies across 18 countries, to set up a joint Singapore-incorporated fund.
Through the fund, the two firms will mobilise capital from local and international investors, including IFC, to invest in mid-size corporate distressed assets in India.
Following IFC’s investment, both Eight Capital and J.C. Flowers will collectively invest $25 million in the JCF Platform (company and fund).
IFC says it expects the investment into the JFC platform to help offload mid-sized distressed assets by Indian financial institutions, which will in turn support their capital position by freeing up capital and increasing liquidity, and reducing large costs associated with the management of these assets
“In addition, IFC expects that the project will help revitalise companies in distress, by working out their existing non-performing loans and providing new financing and support them in preserving jobs,” it said in the disclosure.
Beyond capital support, IFC says it plans to provide assistance in mobilising capital from the private sector to invest in the resolution of mid-sized corporates in distress in India.
The proposed investment into the J.C. platform kicks off IFC’s investment into distressed asset projects in 2021.
Last year, among the similar projects it had proposed were a $30 million investment in a distressed asset recovery programme (DARP) platform being set up by NPL restructuring firm Collectius AG, and a debt facility of up to $45 million for Descap1 Private Equity Trust, a distressed hospitality asset investment vehicle of the Thailand-based Destination Group.