JC Flowers known for rescuing stricken firms

Northern Rock’s potential rescuer has a strong record of snapping up stricken companies and nursing them back to health, often for big rewards.

US firm JC Flowers is a specialist in buying financial institutions in trouble and, while little known in the UK, the private equity firm has established a fearsome reputation as a dealmaker in America.

The New York-based outfit is headed by Chris Flowers, a partner at Goldman Sachs before leaving the investment bank more than a decade ago to form his own buyout business.

The 49-year-old Harvard graduate is now the 239th richest man in the US according to business magazine Forbes, worth around $2bn (€1.3bn).

Since launch in 2001, JC Flowers has invested more than £3bn (€4.1bn) in more than 15 deals across Europe and the US.

One of the group’s most successful buyouts was the deal in 2000 to takeover and relaunch struggling Japanese banking group Long Term Credit Bank. It marked the first time a Japanese bank had fallen under foreign ownership and became one of the most lucrative private equity deals ever, reportedly making JC Flowers around one billion US dollars (£500m). The firm is now in the process of reinvesting in the group it helped turnaround, since rebranded Shinsei Bank.

The financial services expert also sold Dutch bank NIBC to Iceland’s Kaupthing in August for €3bn after leading a consortium to buy it for €2bn two years earlier.

However, Northern Rock would be the firm’s first major UK deal, although JC Flowers was rumoured to be looking at a potential bid for insurance group Friends Provident earlier this year.

Its previous forays into the UK market have been on a much smaller scale, with previous takeovers including financial services research specialist FPK, headquartered in London.

The group’s European team is headed by partner and managing director Ravi Sinha, also a former Goldman Sachs banker, who is set to play an active role in the Northern Rock rescue should its offer win through.

It claims to be successful in “shaping and advising” the management teams of the firms it buys, but has little to work with at Northern Rock, given that chief executive Adam Applegarth and a number of directors on the board last week announced their resignations.

JC Flowers unveiled its proposed heavyweight management line-up for Northern Rock last month, with former Marks & Spencer chairman Paul Myners earmarked as chairman should the bid succeed. Mr Myners – who fought off a hostile offer for the retailer from Sir Philip Green – would be joined by other big hitters, including ex-Alliance & Leicester head Richard Pym as chief executive.