Eight Capital-backed JC Flowers Asset Reconstruction Company has emerged as the highest bidder for stressed maker of pig iron and ductile pipes Sathavahana Ispat but lenders are seeking a better offer.
The Mumbai-based firm beat Maximus ARC (Rs 380 crore), CFM ARC (Rs 370 crore) and Welspun group (Rs 360 crore) with its bid of Rs 410 crore (about $55 million), a person told VCCircle.
The offer translates to a haircut of around 70% for the lenders who seek a better plan under the Swiss challenge method which will be launched soon.
Under the method, lenders will call for more bids and then ask JC Flowers ARC to match the biggest offer.
“The lenders are trying to maximise recovery by taking advantage of the recent surge in steel prices. Steel prices are currently at an all-time high,” the person said.
Hyderabad-based Sathavahana Ispat owes more than Rs 1,381 crore to a consortium of four lending banks led by Canara Bank. The debt was classified as non-performing assets more than three years ago.
The ARC was formed in 2015 along with Ambit Holdings, but JC Flowers took ownership in 2019.
JC Flowers ARC has made two acquisitions so far; the other two deals including the one reported above are yet to close.
In January 2021, VCCircle reported that JC Flowers ARC in partnership with Cantor Fitzgerald had mopped up more than half the debt of a road developer at over 80% discount.
Established in 2015 in India, JC Flowers ARC is 50% owned by US private equity firm JC Flowers, 35% by Mumbai-based Eight Capital and 15% by London-based Emso Asset Management.
Founded in 1989, publicly listed Sathavahana Ispat was 39.58% owned by promoters as on December-end 2020, BSE data showed. Boutique venture capital firm One Earth Capital owned 10.96% of Sathavahana Ispat.