Guy Hands, the British private equity investor behind the disastrous takeover of music label EMI, is raising his first buyout fund since 2007, a US regulatory filing shows.
Mr Hands, chairman and founder of Terra Firma, is asking investors, including some of the world’s largest pension funds, for $3.4bn as he seeks to benefit from a buoyant fundraising environment.
While Terra Firma has so far filed to raise money from US investors, the company will also look to raise funds from European investors, a person familiar with the fundraising said.
“Raising money in Europe will be key for them,” the person added.
The fund is expected to raise money to invest in assets “that are in need of transformation, companies that have been under-invested and have potential for the future”, the person said.
Potential investors include the Canada Pension Plan Investment Board and the California Public Employees’ Retirement System, the person added.
Terra Firma declined to comment.
Mr Hands, regarded as one of the “big beasts” of private equity, nearly went bust after his firm bought EMI in 2007 when the financial crisis hit. He launched and later dropped a £1.5bn lawsuit against Citigroup alleging the bank had misled him into buying the business.
His standing was hit hard by the EMI episode. “He had a fantastic franchise and had built a strong reputation among investors,” said a seasoned fundraiser in London. “EMI was so off-strategy from what he had done before that it became a disproportionately bad deal for Terra Firma.”
However, Terra Firma has generated robust returns for investors with deals such as Autobahn Tank & Rast, the German motorway services operator it bought in 2004 and then sold for 7.5 times its money nearly a decade later.
Mr Hands will be also keen to convince investors of his company’s ability to reinvent itself following the appointment of Andrew Géczy as chief executive last year and Justin King, the former chief executive of J Sainsbury, as vice-chairman and head of portfolio businesses in September 2015.
The prominent private equity investors will have plenty to show to sceptical investors, industry experts said.
“With his previous fund he has made successful investments but it will be interesting to see whether he can raise capital and make the sort of returns for investors before the EMI deal,” a person said.
The new Terra Firma fund comes at a time when private equity groups with strong records are raising capital in record time as investors desperately seek yield.
Earlier this year CVC Capital Partners raised €16bn, a record in Europe, and in the US Apollo raised nearly $25bn, the largest buyout fund ever.
“If you can’t raise money now, you never will,” the seasoned fundraiser said.