MF Global and Chris Flowers Get More Change

When financial institutions are ailing, J. Christopher Flowers can be counted on to be close by.
The private-equity investor made a name for himself buying distressed banks during the Japanese financial crisis in the 1990s. And he emerged at the epicenter of 2008’s financial meltdown, making plays for icons such as Bear Stearns Cos. and American International Group Inc.


Now his firm, J.C. Flowers & Co., is in talks with MF Global Holdings Inc., as the brokerage struggles with multiple credit downgrades in the wake of souring bets it made on European sovereign debt.
With MF Global, the 54-year-old Mr. Flowers isn’t swooping in from afar. MF Global and J.C. Flowers have longstanding ties, and any deal to save the ailing MF Global could help protect J.C. Flowers’s 6% stake preferred stake in the brokerage.

J.C. Flowers gained the position in 2008 when it agreed to help MF Global refinance debt, three months after the firm suffered a $141 million charge from unauthorized wheat trading.
J.C. Flowers backed former New Jersey Governor Jon Corzine when he took the top job at MF Global last year. Mr. Corzine, who also is an operating partner at J.C. Flowers, was an executive at Goldman Sachs Group Inc., as was Mr. Flowers. Requests for comment to J.C. Flowers on Sunday were not returned.


Mr. Flowers became a partner at Goldman in 1988 at age 30, eventually heading its bank-mergers business. He left Goldman in 1998 after helping engineer the firm’s initial public offering.In the ensuing years he worked as vice-chairman of Enstar Group Inc., a Montgomery, Ala.-based trader of over-the-counter and bulletin-boards stocks, and as a sort of freelance investment banker from his office in Manhattan. He raised his first Flowers fund in 2001 to invest in financial services companies, touting the sector’s “enormous amount of opportunity.


Mr. Flowers became particularly ubiquitous in the financial meltdown of 2007 and 2008, when several of the nation’s biggest financial institutions were on the rails. In mid 2008, Mr. Flowers told investors in his Fund II, “This is the Super Bowl of investment. It’s no time to be sitting in the bleachers.”
That year, as he furiously invested much of the $7-billion fund in financial institutions, the former investment banker also played a role advising Bank of America Corp. in its 2008 acquisition of Merrill Lynch & Co.


In September 2008 Mr. Flowers personally acquired northern Missouri’s First National Bank of Cainesville and renamed it Flowers National Bank. Though a small operation in an agricultural region, the acquisition gave Mr. Flowers a platform from which to acquire failed banks or their deposits.
Despite his enthusiasm in 2008, Mr. Flowers’ firm, whose investors include the government of Singapore and Columbia University, was hammered by the turmoil. That fall the fund was marked down about 30%, or $2 billion. Last year, it was marked down to half of its original value.