Author: Mark Johnson



Hands: German effort now yielding results

Persistence pays, as Guy Hands, the ex-Nomura banker-turned-buyout king, shows. His new outfit Terra Firma Capital Partners has just closed its first deal: the purchase of 42,000 apartments in the Ger-man city of Cologne.

The €1.9 billion deal comes just a month after the first clos-ing of his funds. Hands raised €1 billion—well shy of his hoped-for €3 billion but satisfactory in the circumstances, according to rivals in the European buyout market.

Hands made his name at Nomura’s Lon-don office, where he ran an outfit that pio-neered the use of securitization to refinance parcels of unloved assets such as bars and armed forces housing. The €3.8 billion that he invested made an internal rate of return of around 60%, according to Hands, and made him a multi-millionaire.

The new deal is very much in the house style: Hands has long targeted Germany as a land of opportunity for buyouts—ini-tially with little effect. While at Nomura he eventually bought a €2.1 billion parcel of apartments for railway workers.

That deal underlined the potential pit-falls, as well as the opportunities, of tak-ing public assets private in continental Europe. The deal became mired in political infighting.

his time around Terra Firma bought the assets from a savings bank and from the center-left-controlled city government. Much of Europe’s housing is owned by the public sector, and bankers such as Hands have long sought ways of injecting private capital to develop a real estate market along American lines.