Guy Hands checks into Warsteiner hotels
On 2 November 2016 the privately-owned Haus Cramer Group, which also owns the Warsteiner brewery, reported the disposal of 12 of its Welcome hotels division to Terra Firma, a private equity firm founded by Guy Hands in 2002. No financial details were disclosed. Mostly targeting business travellers, the Welcome hotels had a turnover of EUR 60 million (USD 67 million) and were slated for a sale in 2015, insiders say.
Terra Firma plans to use the Welcome Group as a platform for further hotel acquisitions in Germany, considering corporate travellers a lucrative and growing segment of the accommodation sector.
With a reputation preceding him like a thunderclap, Mr Hands is a private equity heavyweight, who brokered pioneering deals at investment bank Nomura, before setting up Terra Firma. Among the landmark deals at Nomura were a series that began with the purchase of boring-looking businesses with flat revenues.
Mr Hands transformed the returns on these businesses by issuing securitised long-term bonds, secured against future cash flow from the underlying assets. It was a piece of financial wizardry that allowed Mr Hands to turn Nomura into one of Britain's biggest publicans, thanks to owning stakes in companies with about 6,000 pubs in total. All in all, Mr Hands is said to have struck deals to a value of EUR 26 billion during his Nomura days, about EUR 20 billion of which was debt financing, mainly securitisations.
Over the years he frequently made headlines, not least thanks to his GBP 2 billion legal battle with one of Wall Street’s largest banks over claims that he was tricked into the disastrous GBP 4.2 billion (then USD 8.25 billion) acquisition of the record label EMI in 2007. The debt-fuelled buyout ended in spectacular failure less than four years later, when EMI’s valuation had collapsed in the recession that followed the financial crisis. Terra Firma nursed losses of more than GBP 1.5 billion, it was reported.
In June 2016 Terra Firma agreed with Citigroup to withdraw the case.
