Guy Hands, founder of UK private equity outfit Terra Firma, is about to do it again. The odds must be slim to none, but Messr. Hands just might catch lightning in a bottle. Another Terra Firma investment is inching towards an inglorious end and if the big man accomplishes this feat, he’ll be the investing world’s version of Bad Luck Brian. Already in the running for The City’s most shambolic investment firm, this would place them squarely in first place.
Every private equity shop has laid an egg here or there. Most of the time they manage to sweep it under the rug without so much fanfare and attention as whooped up when they’ve closed their latest fund. But this “Guy” appears to have a knack for both losing money and creating a PR disaster at the same time.
To refresh BFN readers, Guy Hands’ Terra Firma had the dubious honor of presiding over perhaps the worst private equity investment in history: the acquisition of UK music publishing concern EMI. Terra Firma paid £4.2 billion ($8.3 billion at the time) in August 2007 to acquire EMI. Subsequently a number of artists left the label, a financial crisis hit, and EMI had too much debt to get through it all. By 2011, the owners had run out of options and were forced to relinquish control to the primary lender, Citigroup, wiping out all of the equity (and most of the debt). Terra Firma was reported to have lost a whopping £1.75 ($2.5) billion in the transaction (roughly one-third of investor capital) as well as more than 60% of Hands’ personal wealth (who chipped in along the way to try to keep it afloat). Continue reading