Guy Hands seems to have a well-developed sense of irony.
At an industry conference yesterday, the head of Terra Firma Capital Partners — which is trying to convince investors to cough up about $200 million to salvage its investment in record label EMI — said private equity firms will have a difficult time raising capital in 2010.
Hands told delegates at a Berlin conference that investors are likely to allocate 20 percent to 30 percent less capital to buyout firms this year. At the same time, he said, expect heightened scrutiny of financial models and operational teams assigned to such investments.
“If ever there was a time when past performance is not going to be an indicator of future performance, now is that time,” said Hands, noting that the $35 billion raised in the fourth quarter of 2009 marked the lowest amount raised all year.
“Even the most experienced will have to approach fund raising as if this were their first fund.”
While Hands never mentioned EMI, his plea for investors to ignore past performance and for buyout firms to raise money as if they had just launched was interpreted by some as an admission that his $6 billion bet on the UK record label has been a bust.
Hands’ most recent comments come as Terra Firma is seeking to raise $180 million from investors to avoid failing a debt covenant test at the end of March.