British financier Guy Hands, whose private-equity firm Terra Firma Capital Partners Ltd. lost its investment in British music company EMI Group Ltd. last year, said he is certain he’ll raise another buyout fund.
Hands, 52, said he is “100 percent confident” he’ll raise a new fund, answering questions today after a speech at SuperReturn International conference in Berlin. Asked how big he expects his fund to be, he said “that’s what I am less confident on.”
Hands is targeting clean energy and agricultural investments after losing almost a third of his London-based firm’s most recent 5.4 billion-euro ($7.3 billion) fund on EMI, which Citigroup Inc., its lender, seized in February 2011 and sold in November. He predicted today that European firms will raise less than a third of what they got during the leveraged buyout boom years before the financial crisis.
This will help make Europe the “best place to invest,” he said in his speech, as the overhang of private-equity capital available for deals gradually disappears, European banks dispose of assets and large companies sell units.
“The dynamics by the end of 2013 will firmly be in favor of the buyers, and Europe will become an extremely attractive place to invest,” he said. “The availability of capital to invest in deals in Europe is reducing rapidly.”
Most of the current so-called “dry powder” of more than $300 billion will be gone by the end of next year, he said, as firms inject equity into existing deals that need refinancing and won’t be able to rely on as much debt financing to fund new investments as they could before the collapse Lehman Brothers Holdings Inc.
Investment opportunities will partly come from European banks selling assets, he said.
Those bank assets “having sat there for several years, will have little or no capital expenditures made,” he said. “They will be under-managed, under-invested in, without an updated strategy and with a disillusioned management. They will indeed be perfect for private equity.”