Private equity veteran Guy Hands to step down at Terra Firma

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Guy Hands, one of the UK’s best-known private equity executives, is stepping down as chief investment officer and chair at Terra Firma Capital Partners. 

“When I founded Terra Firma over 20 years ago, I vowed that I would retire from the firm ‘when I’m 64’, as per the eponymous Beatles song. That time has now come as I approach my 64th birthday this August,” Hands said in an internal memo sent to staff and seen by the Financial Times. 

A spokesman for the firm confirmed his departure in an emailed statement.

“Terra Firma will now enter its next phase led by Paul Hatter as COO and Richard Hands as Managing Director responsible for residential investments and new deals,” the statement added. Richard Hands is the son of Guy Hands.

Guy Hands’ exit brings to an end a career in the buyout industry that has spanned about three decades, involving deals including the acquisition of music company EMI, which ended in a high-profile legal battle and lost Hands £200mn of his own fortune. 

Alongside his dealmaking, the Guernsey-based tax exile was a colourful and opinionated figure, in an industry not known for engaging with the media. His move to Guernsey to pay less tax meant he was unable to visit his wife and children at their Kent home for nearly a year.

He was critical of private equity for charging investors hefty fees, and an outspoken campaigner for the UK to remain in the EU.

He recently lost a dispute with the UK government over his ownership of Annington Homes, which involved Hands privatising tens of thousands of properties in the Ministry of Defence’s housing portfolio in 1996.

Hands, a karaoke enthusiast, was among the most visible faces in European private equity, an industry that has long been known for its secrecy. Severely dyslexic, Hands won a place at Oxford university and then began his career in finance as a trainee trader at Goldman Sachs in 1982. He moved into leveraged buyouts when he joined a unit of Nomura in the early 1990s, just as the industry was taking off in the UK. 

He made a name for himself by capitalising on a wave of privatisations under John Major’s Conservative government, buying up Annington Homes as well as Angel Trains, an owner of UK train stock. He also bought a series of pub chains and bookmaker William Hill.

In 2002, he spun the unit out of Nomura to form his own firm, Terra Firma Capital Partners, which raised €2.1bn for its debut fund. 

Under his leadership, Terra Firma established itself as one of Europe’s leading investors, eventually gathering €5.4bn from investors for one of the continent’s largest-ever funds just before the onset of the global financial crisis.

Then it all went wrong. In 2007, Terra Firma took record company EMI private in a deal worth £4.2bn. The company quickly collapsed, wiping out £1.75bn of the firm’s money. Unwilling to admit defeat, Hands embarked on a years-long legal pursuit of Citigroup, alleging that it had committed fraud against him. He dropped his £1.5bn claim against the bank in 2016.

He carried on doing deals though, with some notable successes including the €3.5bn sale of German autobahn service-station chain Tank & Rast, which netted his firm more than five times its money.

But the firm struggled to put the botched EMI deal behind it and largely failed to raise further funds from investors, even as the private equity industry was enjoying a boom, bolstered by low interest rates. Terra Firma was overtaken by peers including CVC Capital Partners and US firms such as Blackstone and KKR & Co.

Its record was further blotted by an ill-fated, debt-laden £825mn takeover of UK care home provider Four Seasons, which collapsed into administration in 2019.

After struggling to raise a fund, Hands in recent years has been focused on doing so called deal-by-deal investing. Last year, the firm bought UK housebuilder Hopkins Homes.

Other assets Terra Firma holds include hotel chain Hand Picked Hotels — owned and run by his wife, Julia — and Australian cattle producer CPC, among others.

Over the past year or so, Hands and his firm have been locked in a contentious legal battle over its ownership of Annington Homes. 

In May, the UK’s High Court upheld the government’s right to buy back ownership of some of the homes, which could have netted Hands billions of pounds. Annington Homes is appealing the judgment.

Hands, whose departure was first reported on Friday by Sky News, would continue to be involved with the firm’s existing portfolio businesses, the internal memo stated.

“To be clear, I will continue to be involved in the portfolio businesses that are Hands Family Investments, as well as in the legacy fund investment, Annington. I will therefore continue to sit on the boards that work with those investments,” he wrote.

His exit comes a month after Terra Firma announced the impending departure of its chief executive, Vivek Ahuja, “to explore new opportunities”. The firm said at the time that the day-to-day operations of the firm would be overseen by Hatter.

This article has been amended to clarify that the UK government has won the right to take back ownership of some of the Annington properties