Compared to those high-flying days of yesteryear, über-deal maker Chris Flowers has been rather quiet – and we’d venture, not overly successful – as of late.
Among the more notable in a series of rather underwhelming deals have been his huge investment, and equally huge paper loss, in Japan’s seemingly chronically-troubled Shinsei Bank, and an inexplicably large investment in 2008 in the then-troubled (and scandal-wracked) commodities broker MF Global.
Flowers evidently felt more comfortable with MF Global after putting in Jon Corzine, his former mentor at Goldman Sachs, to run the operation earlier this year.
He also incurred big losses, particularly in Germany, where investments in Hypo Real Estate, the troubled mortgage bank, and HSH Nordbank, the shipping lender, turned sour after both companies were bailed out by the public sector.
Flowers also came in for criticism over the advice he provided Bank of America on its costly takeover of Merrill Lynch, for which he was paid a $20m personal fee.
Among the numerous deals he failed to bring off in the last few years were attempts to buy failed UK bank Northern Rock amid the credit crisis and also to seal a deal with Friends Provident.
Now Flowers has stuck his head up again, this time in the wide and wonderful world of UK mutuals, with a deal to invest £50m for a 49 per cent stake in a joint venture with Kent Reliance building society.
The deal, as the FT reports on Monday, is aimed at boosting the mutual’s capital base while also establishing a vehicle for “the consolidation of other medium-sized societies”.
The move – expected to be confirmed this week – will be the first time a private equity house has invested in a UK mutual lender, adds the report.
This time around, Flowers has added some firepower to his European operations. Sir Callum McCarthy, former chairman of the Financial Services Authority and now European chairman of JC Flowers, will join the board of the new entity and could be chairman, according to the FT.
Sir Callum, a City veteran, joined JC Flowers late last year at the same time that David Morgan, the Australian former Westpac bank chief executive, took over running the UK and European operations, following the departure of Ravi Sinha.
It should be noted that Sinha, who led Flowers’ failed attempts to buy Northern Rock and Friends Provident, left the group in April, amid an FSA probe of allegations that he misappropriated £1.3m.
In the Kent deal, the capital injection from JC Flowers will enable the mutual to increase its mortgage lending in the Channel Islands, which comprises 40 per cent of its existing loan book, noted the FT.
People familiar with the proposed deal rejected suggestions that it was a rescue of the society, with talks between JC Flowers and Kent Reliance said to have started in October, the report added.
Still, as has become patently clear, Flowers likes a troubled company when he sees one.
Related links:
Jon Corzine takes the reins at MF Global - FT Alphaville
Focus gives Flowers a headache – FT
Building societies face fresh wave of mergers – Mark Kleinman / Sky News