Hands leaps at opportunities to expand his buyout empire

The Co-op Group’s pharmacies business, put up for sale after the dire losses of the mutual, is “definitely worth looking at”, says Hands, while privately owned Superdrug, considered a “pretty good retailer”, is another potential target.

The first of the two new funds is the $2bn (£1.2bn) IFGRE fund, which will focus on renewable energy and infrastructure investments, following Terra Firma’s recent flotation of Infinis, the UK’s largest independent renewable energy generator.

The second, which will launch in the second half of the year, will aim to raise €2bn to spend on leveraged buyouts and asset-rich businesses “in need of transformation”.

Hands declines to say how much the IFGRE fund has raised since launching in February, or when the investment round will close.

But it seems it is proving harder to entice pension funds and sovereign wealth investors to pledge money in the wake of the EMI debacle, which cost Terra Firma investors £1.75bn.

Damian Darragh, the head of the flagship green energy fund, who started fundraising two years ago, was recently “asked to leave with immediate effect”, reportedly over a disagreement over fundraising strategy.

Mr Darragh’s exit comes against the backdrop of major institutional investors increasingly preferring to invest direct in a company, rather than through funds.

Three years ago, around 30pc of talks with the UK’s 4,000 private-equity institutional investors would have resulted in funds being pledged.

Now, that percentage is down to between 10pc to 15pc, meaning private- equity companies are reverting to securing smaller amounts of money from a greater number of backers.

According to market sources, the 180 investors in Terra Firma’s most recent fund put in an average of around £30m. “You have to wear out a lot of shoe leather, but you do earn a lot of frequent flyer miles,” says Hands, 54.

Perhaps also in response to being burnt by the EMI deal, in which he invested 30pc of two Terra Firma funds, Hands is focusing on the company’s most successful space of investing in companies worth around €750m.

One such investment, The Garden Centre Group, has more than doubled its deal value of €360m to around €730m.

Terra Firma’s 10 remaining existing investments include CPC, an Australian cattle company, UK care-home operator Four Seasons Healthcare, and the cinema chain Odeon & UCI.

Terra Firma pulled the £1.25bn float of the cinema group last November amid weak trading in its key eurozone markets of Spain and Italy. But Hands says a sale of the media company, led by new chief executive Paul Donovan, could be revived from 2016.

Hands looked at Boots the chemist before its acquisition by rival private- equity house KKR, and remains keen on high-street health-care retailers.

But a return to the pubs sector is “unlikely” for the buyout baron, who once owned 8,500 pubs through groups such as Thresher and Phoenix Inns.

Nor is he interested in gambling, after owning bookmaker William Hill. “A large number of our investors won’t do drugs, won’t do alcohol, won’t do arms,” he says. “There are good business reasons to be cautious in those areas.”

Unethical investments would also sit uneasily with Hands’s support of human rights, the topic of the recent Hands Lecture at his Oxford University alma mater, Mansfield College.

The annual lecture, now in its 12th year, was named after the financier after his “significant” donation to Mansfield College saved it from severe financial difficulties.

Hands has also pledged £2m towards Mansfield’s new £34m centre dedicated to the study of human-rights law, designed by architect Rick Mather, on which work will start next spring.

In between fundraising and philanthropy, one of Hands’s hobbies is photography. Aged 16, he came second in a local newspaper photojournalism competition, with a picture of Jeremy Thorpe, the scandal-hit former Liberal Democrat leader, on a hovercraft moments before it crashed.

Whether the dealmaker who made his name at Goldman Sachs and Nomura manages to be in the right place at the right time again depends on the goodwill of investors.

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