Terra Firma seals first deal since 2012

The acquisition of Welcome Hotels will be the first deal-by-deal transaction for the Guy Hands-led firm.

Terra Firma Capital Partners has agreed to acquire Welcome Hotels, a portfolio of German hotels.

Financial terms of the deal were not disclosed.

The transaction will be the firm’s first since 2012, when it acquired Annington Homes from Nomura International in a £3.2 billion ($3.9 billion; €3.5 billion) deal.

The transaction is expected to complete before year-end.

Last year Terra Firma announced it had committed capital of €1 billion for future deals, a mix of Terra Firma’s capital and third-party money, as reported by Private Equity International. The investment in Welcome Hotels comes from this pool, it is understood.

Terra Firma is acquiring the portfolio of 12 hotels from Haus Cramer Group. The hotels are located across Germany and cater to business travellers and corporate events. The firm will be looking to expand the portfolio within the country predominantly through add-on acquisitions, it is understood.

“Terra Firma will be investing significantly in the business to maintain and enhance the customer experience, and we will also look to grow the business further on the back of its strong existing estate,” Terra Firma chairman and chief investment officer Guy Hands said.

Although it has been a quiet few years for the firm on the investment side, Terra Firma has exited several portfolio companies.

This week the firm agreed to sell Infinis plc, the landfill gas assets of Infinis Group, to 3i Infrastructure for £185 million.

In July Terra Firma agreed to sell Odeon and UCI Cinemas Group to US cinema chain AMC Theatres, which is backed by Chinese conglomerate Dalian Wanda, in a deal valuing the businesses at around £921 million ($1.22 billion; €1.1 billion), as reported by PEI.

In September 2015 the firm completed the sale of German motorway service area firm Tank und Rast to a consortium of buyers made up of Allianz Capital Partners, OMERS-backed Borealis Infrastructure, ADIA-owned Infinity Investments, and MEAG, the asset manager for German insurance firm Munich Re, in a deal worth €3.9 billion and delivering a cash-on-cash multiple of 7.5x to Terra Firma and fellow owner Deutsche Asset & Wealth Management.

Terra Firma has made some significant changes to its leadership team in the last two years. In July the firm brought in Andrew Géczy, a veteran of Australia & New Zealand Banking Group, Lloyds Banking Group and Citigroup, as chief executive officer.

Earlier this year, the firm added three managing directors. Alex Williams joined from energy specialist First Reserve, Jyrki Lee Korhonen joined from northern European firm Triton Advisers and Michele Russo, a veteran of both Doughty Hanson and Lazard, joined having previously established his own GP in Milan, Opera Private Equity, to execute direct secondaries transactions.

These three hires came after Justin King, well-known in the corporate world for his turnaround of supermarket group Sainsbury's, joined the firm in late 2015 as vice-chairman and head of portfolio businesses.