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FINANCIAL | Asset/Financial Management

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Stage

Corporate Majority | Acquired

About Ambit Flowers ARC

Ambit Flowers ARC is an asset restructuring joint venture between Mumbai-based brokerage Ambit Capital and US private equity firm JC Flowers.

Ambit Flowers ARC Headquarter Location

India

Latest Ambit Flowers ARC News

Insolvency and Bankruptcy Code: What prompts Ambit Flowers ARC to raise up to $1billion - The Economic Times

Mar 26, 2019

What prompts Ambit Flowers ARC to raise up to $1billion SECTIONS By Share Synopsis Ambit Flowers aims to buy sticky loans directly from banks which are keen to get rid of such bad loans eating into profits though at the cost of some losses. The company is said to have finalised its strategic business plan, including the kind of assets it would be seeking to buy from the banks, and broad strategies to follow in restructuring assets. Related Companies PEER COMPANIES Ambit Flowers ARC, an asset restructuring joint venture between Mumbai-based brokerage Ambit Capital and US private equity firm JC Flowers, plans to raise up to $1billion from global investors to invest in distressed assets under insolvency proceedings. The asset reconstruction company plans to raise $150-250 million in the first tranche, two persons familiar with the matter told ET. Other tranches would follow depending on its success, they said. Implementation of the Insolvency and Bankruptcy Code (IBC) has widened opportunities for stressed asset buyers by detailing a time-bound insolvency mechanism that could well throw a lifeline to both debt-laden companies and the country’s banks stuck with about Rs 9 lakh crore of soured loans. Ambit Flowers aims to buy sticky loans directly from banks which are keen to get rid of such bad loans eating into profits, the sources said. Shardul Shroff, executive chairman of law firm Shardul Amarchand Mangaldas, had recently said that such assets will be sold at a discount and hence “there may be interest among foreigners to get into some of these processes.” An Ambit Flowers executive, who requested not to be named as he is not authorised to speak on its behalf, said the company “is keenly watching various developments taking place in the distressed assets space including the bankruptcy proceedings in National Company Law Tribunal”. Rahul Gupta, director at Ambit Flowers ARC (AFARC), did not confirm the development but said he expected asset restructuring companies to play “an increasingly important role” in the resolu tion of stressed assets in the Indian banking industry. “AFARC has been one of the early movers to obtain RBI appro- val and we have been closely monitoring the developments in this space,” said Gupta. “Our focus is to create value by right sizing the debt, restructuring of balance sheet, management intervention and additional capital infusion.” James Christopher Flowers, founder of JC Flowers, had in an earlier interaction with ETtalked about the potential of an active stressed assets market in the country due to accumulated stock of bad loans. “If that market develops then you know there are going to be good investment opportunities,” he had said. New York-based JC Flowers manages billions of dollars. It holds 47.5% stake in Ambit Flowers ARC — the same as Ambit Capital. The balance 5% is held by Jaithirth (Jerry) Rao, founder and former CEO of software firm MphasiS who now runs affordable housing venture Value and Budget Housing Corporation. Ambit Flowers recently appointed K M Jayarao, former general manager at ICICI Bank , as its executive vice chairman. The company is said to have finalised its strategic business plan, including the kind of assets it would be seeking to buy from the banks, and broad strategies to follow in restructuring assets to create value to all stakeholders. “Assets the ARC will be targeting would be mid corporates which have been passing through stress primarily due to high leverage, inadequate or poor management and needing incremental capital to revive the operations,” said the company executive quoted earlier. Ambit Flowers is already in talks with various potential investors globally willing to buy India’s stress asset story amid economic reform measures. Since last year, National Company Law Tribunals have been dealing with default cases in a timebound manner, deciding on cases within maximum nine months. Such courts have so far decided more than 665 cases under the Insolvency and Bankruptcy Code. A defaulting company can either go for a resolution or liquidation. In case of resolution, overseas stressed assets funds/ private equity players can step in to buy a controlling stake in any company that has failed to repay debt. For example, JSW Steel and Tata Steel may have to compete with a raft of private equity investors, including Blackstone, in the race for a controlling stake in Monnet Ispat , the troubled maker of the alloy steel that is in the bankruptcy courts for loan defaults. Read More News on

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