Guy Hands’ Terra Firma changes tact to reboot reputation

Guy Hands, who took the reins of the once-mighty and autonomous EMI Music for US$6.3 billion from Citigroup in 2007, is breaking the traditional private equity model with his company Terra Firma.

The British private equity group is renowned in the music industry for playing a large hand in the breakdown of EMI, but it won’t be raising pools of money blind, as is common for equity firms. As part of its comeback it will instead invest US$1.1 billion of its own capital into future deals, alongside funds raised from third-party investors.

Hands is reportedly aiming to restore his reputation, in a statement published by the Financial Times, hesaid: “The message to me was: ‘Guy, look, you have probably the best track record on individual deals, but EMI blotted your copy book […]”

Documents seen by investors report that the fund used to purchase EMI, Terra Firma CP III, posted an 85% gross return between 2011 and 2013.

Hands’ reported mismanagement left EMI in debt US$2.7 billion; its sale of its recorded assets gave Universal Music Group dominant market share and its sale of its publishing divisions has made Sony/ATV the globe’s dominant publisher.

Terra Firma’s legal dispute – regarding its creditor Citigroup’s alleged fabrication of a competing offer on EMI – will return to London courts in 2016.