Guy Hands has come out in defence of the private equity industry by proclaiming that that public sentiment relating to private equity is out of context with modern reality.
Addressing a room of business leaders at Private Equity International’s Operating Partners Forum, Hands, chief investment officer and chairman at Terra Firma, said that the term ‘asset-stripper’ is outdated.
‘Running a business down to nothing – stripping the assets – is very tough. I’d like to see anyone who accuse the private equity industry of being asset-strippers actually try to run a company like this,’ he explained. ‘You cannot do it these days…you’ll end up in jail.’
Hands’s Terra Firma has previously made investments in betting chain William Hill and wine business Thresher, which it exited for €1.1 billion in 1999 and €357 million in 2007 respectively. It currently counts the likes of cinema company Odeon & UCI and Four Seasons Health Care as portfolio businesses.
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Speaking up for the private equity industry, Hands added, ‘The reality is that to create alpha, you need hard work, extensive data analysis and to sweat the small things.
‘We focus on obsessive, asset-by-asset due diligence. When we owned more than 8,500 pubs – an industry which many people considered to be in decline – we conducted site-by-site analysis and created individual business plans for each pub.’
Terra Firma’s 2013 activity saw the firm’s RTR investment acquire a portfolio of solar power plants, secure the sale of Phoenix Natural Gas and achieve partial sales of Deutsche Annington and Infinis through IPOs in Frankfurt and London.
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