Privately Speaking Guy Hands Terra Firma

Let there be no doubt: Guy Hands is planning for an active future in private equity. No wonder, then, that he is preoccupied with his firm’s ability to raise capital.

Speaking to Private Equity International in May during his first visit to London in five years, the Guernsey-based deal-maker – who in 2007 steered his investment business Terra Firma towards one of the largest single-sponsor losses in private equity history – is very much in forward-thinking mode.

Not that he’s in any way coy or unwilling to talk about the pain caused by the disaster that was the top-of-the-market buyout of British music publisher EMI. During the interview, Hands is as open about many topics as he has always been, and he makes no exception for the impact of EMI’s failure on himself, his firm, and his investors.

Of the saga’s personal repercussions, he says: “It has changed me in a number of important ways. I’m much less trusting of people, and I feel I have to fight that and try to be positive. I’m also much more humble and modest.”

It could not be otherwise. It’s difficult to think of another unsuccessful private equity investment that has attracted as much public scrutiny as EMI, and much of it inevitably focused on Hands himself. At the time it must have been extraordinarily hard to live with, even for a man with as much experience of operating under the glare of the media as Guy Hands. But while he clearly took a beating, he seems to be recovering well.

“Even my love for music has come back,” he says. Convincingly, too.

After a calamity like that, others might have walked away from institutional money management altogether. Hands, however, discusses his and Terra Firma’s future with such gusto and trademark positivity that one cannot help surmising that the possibility of calling it a day has simply never occurred to him.

WILL THESE HANDS NE’ER BE CLEAN?

Of course, Hands is under no illusion about the long shadow EMI continues to cast. 

The demise of the deal saddled Terra Firma’s two most recent buyout funds with a combined equity loss of £1.58 billion. In 2010, Hands lost his New York court case against Citi, the bank he claims had pushed him into buying the company under false pretences. Since then he’s won the right to a retrial in 2015, which this time around will take place in London. 

Whether the outcome of these proceedings will bring the reversal of fortune that Terra Firma and its investors must hope for is a moot point. What it is unlikely to achieve is the removal of the stain from Terra Firma’s investment record.

As Hands acknowledges…