Flowers leaves US for London
Christopher Flowers, the veteran private equity investor, has moved to London from the US, seeing a shift in the balance of investment opportunities to Europe.
Mr Flowers rose to fame a decade ago when he quadrupled his money after scooping up Japan’s failed Long Term Credit Bank but has suffered some high-profile investment missteps since.
According to people close to the financier, he moved from New York to London last month and is about to move into a new home in Belgravia. Mr Flowers has never lived outside the US before.
His firm, JC Flowers, launched a spate of investments in Europe several years ago, but the big bets of the firm’s third and current $2.9bn fund have been focused more on the Americas.
Mr Flowers suffered a succession of duff investments amid the financial crisis, dragging down the value of the firm’s second $7bn fund by nearly two-thirds, according to estimates.
It lost close to $1bn on a stake acquired in Germany’s now nationalised Hypo Real Estate, while the potential value of a near $2bn investment in one of the country’s biggest public-sector banks, HSH Nordbank, remains uncertain.
A second bet on LTCB, now renamed Shinsei, four years ago has also backfired, with the bank’s shares trading at barely Y100, compared with its 2008 peak of nearly Y500. The firm’s latest, though far smaller, hit came from the demise of US broker-dealer MF Global, in which JC Flowers had bought a stake of about 7 per cent.
However, the fortunes of Mr Flowers’ third fund look brighter. Within barely a year, it has turned a profit of nearly 50 per cent on its initial investment of close to $500m in BTG Pactual, after the Brazilian investment bank priced its initial public offering this week. It is also betting on being able to capitalise on turning round US mortgage lender IndyMac, bought out of bankruptcy in 2009.
Some of the firm’s recent investments – as well as some abortive deals – have signalled Mr Flowers’ fresh focus on Europe. He has bought Italian broker Equita Sim, an insurance unit, from Belgian bank KBC, as well as French insurance processor CEP and UK building society Kent Reliance. He has shied away from investing in Spain, despite looking closely at several potential deals with troubled savings banks in the country.
People close to the firm suggested future deals would continue to steer clear of the Spanish market given the country’s economic woes. Acquisitions would be focused on insurance businesses and other non-bank financial services firms across Europe, they said.
Last month Mr Flowers told delegates at the annual Super Return private equity conference in Berlin that he was nervous of a large European bank or sovereign failing. A Spanish or Italian sovereign default would be “catastrophic”, he said.