The end of an era beckoned at the London-based buyout firm Terra Firma yesterday when the owner of the music company EMI announced that its founder and head, Guy Hands, will step down from the post of chief executive. Mr Hands, 49, will retain the roles of chief investment officer and the chairmanship of the company.
A source close to the financier, who rose to fame in the late 1990s as head of the Japanese bank Nomura's securitisation business, said Mr Hands wanted to focus on running the private equity firm's companies – which include troubled EMI – and dealing with its investors. Mr Hands, who created Terra Firma in 2002, attended more than 400 internal meetings last year, and wants to hand over the administrative burden of that part of the work to somebody else, added the source.
Tim Pryce, who will assume the role of chief executive, is another founder member of Terra Firma. He worked with Mr Hands at Nomura, and is a member of the group's investment advisory and remuneration committees as well as general counsel.
"As chief executive, Tim will be responsible for Terra Firma's day-to-day operations while I will concentrate on investments, investors and developing the business internationally," said Mr Hands on Terra Firma's website.
Terra Firma said earlier this month that it would be handing back some €80m (£70m) of performance fees after the firm wrote down the value of its assets by €1.37bn.
"If our investors suffer, then it is only right that the Terra Firma team's reward should suffer at the same time," Mr Hands said at the time.
Mr Hands was widely viewed as having invented the financial instrument of securitisation – or issuing debt backed by a business's cashflow – when he was at Nomura. Among the deals he concluded for the investment bank was the acquisition of Angel Trains. But he distanced himself from the practice of securitisation in 2005, saying it removed companies' flexibility to make changes.
Mr Hands will have plenty on his mind as he takes a more involved approach to running Terra Firma's businesses. Buyout firms are finding it tough, as firms they own buckle under the pressure of the high amount of debt used to buy them. Many have taken huge writedowns to the value of investments. Additionally, Terra Firma, whose other investments include Odeon-UCI cinemas, has invested in sectors such as music publishing, which were already suffering before the economic downturn.
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