J.C. Flowers Reaps 2.5x With Encore Capital

J.C. Flowers & Co. is set to reap a 2.5-times return on its investment in Encore Capital Group Inc., Reuters reported Thursday. Encore, which buys bad consumer debt and then tries to recover the money, said on Thursday it priced an underwritten public offering of 3.61 million shares by J.C. Flowers at $24.35 per share. J.C. Flowers originally bought into Encore in May 2007 at $9.75 per share for a total of $52.9 million, Reuters wrote.

(Reuters) – J.C. Flowers & Co, which may lose money in the MF Global Holdings Ltd bankruptcy, is set to reap a 2.5 times return on another investment — Encore Capital Group Inc , a source close to the private equity firm said.

Encore — which buys bad consumer debt and then tries to recover the money — said on Thursday it priced an underwritten public offering of 3.61 million shares by J.C. Flowers at $24.35 per share.

J.C. Flowers originally bought into Encore in May 2007 at $9.75 per share for a total of $52.9 million, the source said.

Total proceeds to the firm, including a stock sale in March, add up to $131.6 million, including the green shoe, the source said.

The private equity firm, founded by former Goldman Sachs banker J. Christopher Flowers, focuses on financial services, and the firm’s overall returns reflect what has been a rocky time for investors in the sector.

The Encore investment was part of a roughly $7 billion fund J.C. Flowers raised in 2006. That fund, which also included the MF Global investment, is down about 60 percent, the source said.

J.C. Flowers’ net exposure to MF Global is about $47.8 million.

J.C. Flowers’ latest fund, which raised $2.3 billion in 2009 and has invested about half the money, is doing much better and is currently up about 30 percent, according to the source.

The gains in the latest fund include those from investments in OneWest Bank, formerly known as IndyMac, and Brazilian bank BTG Pactual, the source said.