Business Irish

Friday 21 July 2017

Anglo clients lose €6.9m in JC Flowers venture

Emmet Oliver

CLIENTS of Anglo Irish Bank who joined a partnership together shortly before the bank was nationalised have sustained losses of $9.7m (€6.9m) from the venture, which ploughed all its money into a JC Flowers fund aimed at the banking sector.

The Anglo Irish JCF 1 limited liability partnership was set up in October 2008 and the reasons for setting it up at that sensitive time have never been fully explained. Several developer clients were among those who joined the partnership. Anglo was ultimately nationalised in January 2009.

There is now only $6.2m of equity left in the fund for the partners after an impairment was incurred because of the global downturn, its 2009 accounts filed in the UK show.

Guarantee

The partnership was set up when Sean FitzPatrick and David Drumm were in charge of the bank and the reasons for setting it up are being looked at by the current management, led by Mike Aynsley.

Results for the partnership show it was set up on October 24, weeks after the bank was brought under the government guarantee scheme.

According to the accounts, its principal activity was to invest in JC Flowers II, a private equity fund that invests in banks globally. JC Flowers was founded by Chistopher Flowers, the US private equity investor.

Flowers has been chasing a number of banking deals in Ireland in the past year and half, including EBS. Past media reports suggested his firm was pursuing Bank of Ireland, and, at one stage, there were reports his firm was looking at Anglo Irish Bank itself.

The investment made by the partnership is registered in the name of Anglo Irish Bank which holds the investment for the benefit of the partners.

The accounts show that turnover, from the Flowers fund, only produced $255,038 in income, with the overall investment falling in value by $9.9m, leaving losses of $9.7m to be absorbed by the various partners.

Irish Independent

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