Terra Firma Capital Partners Limited

Investing on solid ground

Terra Firma Capital Partners is a European private investment firm that was spun off from Nomura Principal Finance Group in 2002 and has since invested approximately $11 billion.  This London-based company takes a slightly different approach to investing.  Instead of choosing companies that are on the way up the ladder of success, Terra Firma tries to find those companies that have the potential to succeed but have somehow been overlooked due to bad management or neglect.  Terra Firma tries to put these companies back on the track to success by taking an active role in their management, refining the firms' strategic and operational plans.  Terra Firma's portfolio companies include Phoenix Inns, Angel Trains, Annington Homes, Voyager, HBS, Deutsche Annington, Le Meridien, AWAS and Odeon.

Musically challenged

In 2007, former Terra Firma CEO Guy Hands made a high-profile gamble with the $6.7 billion buyout of the struggling music company EMI.  The purchase of EMI has been one of Terra Firma and Guy Hands' greatest challenges and widely publicized investments which came at a time when EMI's pretax profits were down more than 60 percent due to lagging sales.  Hands became chairman of EMI in late 2007, and one of his first moves in the leadership role was to announce a round of layoffs that would eliminate 1,500 to 2,000 of EMI's 5,500 employees.  The move came under great scrutiny not just from the press but also from celebrity recording artists, such as Robbie Williams and Kylie Minogue.  Both Radiohead and soul singer Joss Stone left the label due to conflicts with Hands.  One of Hands' most unpopular moves at the company was to limit the expense accounts of artists.  Former EMI shareholder and hedge fund manager Hugh Hendry told The New York Times in June 2008, "They hate him.  He's rude.  He's abrasive.  He wants to make money.  He's the first to say to artists, ‘We are not going to pay you too much money.  Now get out of my office.'"

Despite Hands' reputation for being ill-mannered, the private equity industry still might pay dividends for Guy Hands and Terra Firma as a recent internal research document showed that if the company can fully seize upon digital initiatives, EMI may have the potential of earning $1.1 billion by 2010.  However, before reaching that mark, Hands resigned from his post in March 2009, which signified an end of an era for the troubled recording company.  Despite this, he maintained his position as chairman and chief investment officer of the company.  Tim Pryce, the company's general counsel, replaced Hands as chief executive.  Hands' resignation came days after the announcement that Terra Firma has written off half the value of its â'¬2.6 billion investment in the music group EMI.

Going transparent

In 2008, Terra Firma let its hair down and laid its cards on the table by releasing an annual report so candid that it might as well have been a tell-all book.  The very frank annual report was brought about by the commissioning of the Walker Report, spearheaded by British banker Sir David Walker.  The Walker Report encouraged the private equity industry to be more open on their dealings and to give an "enhanced reporting" on their operations.  Although Terra Firma's Guy Hands was at first cynical about the idea of disclosing information that may be used against the company, the annual report of the firm proved to be more informative than the other reports published, even exceeding the guidelines laid down by the Walker Report.



Terra Firma Capital Partners Limited


2 More London Riverside
London SE1 2AP
Phone: +44 (0)20 7015 9500
www.terrafirma.com

STATS


  • Employer Type: Private
  • CEO: Tim Pryce
  • 2008 Employees: 100

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