Chairman's letters and speeches

07 April 2017

2016 Q4 Investor Letter (Extracts)

I recently spoke at Bloomberg’s Private Equity Forum to reflect on the surprise events of 2016 and to discuss our industry’s outlook for 2017. Most of us agreed that, with the UK’s Brexit vote and Donald Trump’s election as President in the US, the investment landscape is barely recognisable compared with a year ago...

07 December 2016

2016 Q3 Investor Letter (Extracts)

I would like to start by thanking those of you who joined us at our Annual Conference in London in September, and for the feedback you have shared since. I believe it was our most successful conference of recent years, and it allowed me the opportunity to thank you for the commitment you have shown us over the past several years.

19 October 2016

Guy Hands speech at MIPIM UK: Brexit and its impact on UK property investment

Since the outcome of the EU referendum in June, we in the real estate investment industry have been facing a big question: how will Brexit affect property values in the UK?

09 March 2016

Guy Hands speech at SuperReturn Berlin: Private equity investment in an uncertain world

Last month, I spoke to an audience of several hundred students from around the world about how to forge their own paths in a time that feels increasingly more uncertain and scary. They felt that today is unusual in that they face more difficulties than previous generations have faced and they might be worse off than their parents.

18 January 2016

Guy Hands speech at the LSE Alternative Investments Conference: “Forging your path in an uncertain world”

It’s an honour to be here, speaking to a group that will include leaders of commerce and industry. And since there are many potential future leaders out there among you, I’d like to share some thoughts with you. These are based on my forty years as an entrepreneur concentrated mainly on the alternative investments area, as to what it takes to survive and succeed in a world that appears to be becoming less and less predictable.

18 November 2015

Guy Hands Speech at SuperInvestor Amsterdam: Putting the ‘Partner’ back in ‘General Partner’

At the end of last year, Terra Firma celebrated its 20th anniversary.

Over the past two decades, I’ve looked at and considered a vast number of different private equity business models: partnerships, public companies, family offices, sovereign wealth funds, bank-sponsored teams, co-operatives and even crowdfunded groups.

However, the one constant I’ve noticed is that the people I interview for jobs have, over the years, become less and less happy. Interviewing private equity people makes one feel like an agony aunt – no one seems satisfied and everyone seems envious and critical of everyone else.

13 November 2015

2015 Q3 Investor letter (Extracts)

In September, the Federal Reserve opted not to raise rates, while only months earlier the first hike in nearly ten years had been widely anticipated. As the autumn has progressed, the Fed’s decision has proved to be a wise one, as the global economic recovery appears ever more fragile and unpredictable.

14 August 2015

2015 Q2 Investor letter (Extracts)

The drama in Greece has dominated the news recently and, although at the time of writing a deal has apparently been done, I am not optimistic about its chances of success.

10 July 2015

Guy Hands Speech at Terra Firma Hong Kong Investment Summit

Good afternoon and thank you all for being here today. It is very good to be in Hong Kong again and to see so many of our investors and friends here. I always look forward to my visits to Hong Kong, which I think is one of the most dynamic and creative places in the world.

02 June 2015

Guy Hands Speech at Terra Firma’s Annual Investor Conference

15 May 2015

2015 Q1 Investor letter (Extracts)

This may be the worst geopolitical situation of my lifetime. The situation the West faces today is more unpredictable than it has been since the end of the nineteenth century.

18 March 2015

Guy Hands Speech at DVCA Copenhagen

Thank you for having me here to address you. Denmark is an important jurisdiction for private equity, both in terms of GPs and LPs. I am glad to see that the DVCA continues to flourish, with over 200 members.

11 March 2015

2014 Q4 Investor Letter (Extracts)

The global political situation remains volatile and contentious. One only has to look as far as our neighbours in Greece, where the victory of Syriza in recent elections rekindled talks of a Greek exit. Whilst the early signs seem to suggest that this isn’t likely, there is still debate over whether Greece will be able to back out of its commitments to repay loans and reform its economy.

24 November 2014

2014 Q3 Investor Letter (Extracts)

The global economy seems to be moving in two different directions. While the American and British economies are enjoying steady growth, the rest of the world seems to be slowing down, with the Eurozone possibly facing stagnation or even deflation.

03 March 2014

Guy Hands Speech at SuperReturn Berlin: "Private Equity: The Forces Impacting Returns"

Last year at this event I said that there were increasing opportunities in private equity in Europe, though not to the same level as in the US where the debt markets had reopened fully. A year later, the balance has shifted. In the US, rising prices mean there is a lack of good buying opportunities. By contrast, assets in Europe are under-priced, while the European economy is poised for a recovery following years of crisis and uncertainty. Opportunities now exist in the recovering European market. Banks will increasingly dispose of the bad loans to zombie companies that they have been holding on their balance sheets, while corporates are focusing on their core businesses, which will also lead to disposals. And governments are selling assets to reduce debt levels.

20 November 2013

Guy Hands Speech at SuperInvestor Paris – "Unlocking Value in a New Era of Private Equity"

Where is the private equity industry heading? Clearly 2008 through 2012 was tough for private equity, but the industry has recovered from the great credit crisis and today is doing as well as ever. During the period of recovery, private equity firms diverged between the large players, who are often public or aiming to go public, and specialist GPs.

14 November 2013

2013 Q3 Investor Letter (Extracts)

After five years of waiting, we can just about claim to have a global recovery, with GDP now growing at a respectable pace in the US, the UK and Japan, and even Europe enjoying a slow recovery. However, it is a recovery based on huge monetary stimulus from governments and central banks. Without this support, it looks fragile at best.

14 August 2013

2013 Q2 Investor Letter (Extracts)

Nearly five years after the failure of Lehman Brothers tipped the western world into financial crisis and recession, there are growing signs that a recovery is under way.

07 June 2013

Guy Hands speech at SuperReturn US - "Why One Should Invest in Europe"

The economic crisis may have passed its most acute phase, and while last year’s crisis was never as bad as the press reported, there will be more crises to follow. Indeed it is difficult to see anything but political and economic volatility over the next few years with no clear way forward being agreed for the European Union. However, it is important not to underestimate the political will of many countries and senior politicians in Europe to keep Europe together and to keep driving the European project forward.

21 May 2013

2013 Q1 Investor Letter (Extracts)

As economic and political difficulties continue to rumble on in Europe, we find investors growing tolerant of what has become background noise. Most are returning to normal levels of investment activity, as evidenced by the rallying of global stock markets in the past 12 months.

30 April 2013

Letter from the Chairman, Terra Firma Annual Review 2012

We have continued to invest in our portfolio businesses, reflecting our strong commitment to making each one a top performer in its sector.

09 April 2013

Guy Hands speech at SuperReturn China - "Private Equity Investing: What Lessons Can The Private Equity Community In China Learn From The Mistakes Others Have Made Elsewhere"

As the private equity market in China continues to develop and mature, I think it would be useful to look at the global private equity industry’s recent past to see what lessons can be learnt. Private equity has made a number of mistakes, and by identifying and understanding them, Chinese private equity may be able to avoid a repeat of these errors.

27 February 2013

Guy Hands speech at SuperReturn Berlin - "Ex-Growth Europe: How Will Private Equity Continue To Produce Good Returns?"

Five years ago at a similar conference, I suggested that the banking community wasn’t going to be providing substantial levels of credit to the European private equity community any time soon.

04 February 2013

2012 Q4 Investor letter (Extracts)

As we enter 2013, the biggest global trend I see this year is that of markets taking a backseat to politics. From 1982 to 2007, we largely had markets in the driver’s seat, with financial institutions being given ever increasing freedom and support. However, since the 2008 credit crunch, the politicians have taken over. This makes it much harder to know where to invest.

04 December 2012

2012 Q3 Investor Letter

As we approach the end of 2012, Europe is facing the same political and economic problems which have confronted it over the past few years, and it has still not come up with a solution.  In this quarter, Europe may not be facing the real possibility of economic meltdown as it did earlier in the year, but neither is it showing any evidence of the sort of growth needed to pull the continent out of its economic malaise. 

17 September 2012

The Case for Having Investment Boundaries

An extract of this appeared in the Financial Times, Blueprint for British business Supplement: Risk Management, 18 September 2012

13 September 2012

2012 Q2 Investor letter (Extracts)

Another quarter and another summit of EU leaders trying to calm the markets. It is a continuation of the emotional cycle of fear followed by relief that we have all been going through since late 2009.

01 June 2012

Speech to Limited Partner Group - June 2012

The situation in southern Europe today reminds me of how I felt as a teenager in 1970s pre-Thatcher Britain, living in a country with constant strikes, falling living standards and seemingly no way out of its debt crisis.

22 May 2012

2012 Q1 Investor letter (Extracts)

Just like the British weather this Spring, market sentiment towards the European monetary system is unpredictable and prone to extremes. The optimism which drove the European markets’ recovery during most of the first three months of the year, helped by the money pumped into the financial system by the ECB, has already disappeared.

29 February 2012

Guy Hands' speech at Super Return, Berlin - “Economic storm clouds and options in Europe: where can Private Equity find value?”

The father of innovation is necessity and out of the current economic crisis will by necessity come innovation.

27 February 2012

2011 Q4 Investor Letter (Extracts)

After an encouraging first half, 2011 turned out to be a tough year as concerns about the faltering global economic recovery generally, and the troubles in the Eurozone specifically, became more pronounced.

01 February 2012

Guy Hands' speech at 18th VC & PE Conference, Harvard Business School - "My first forty years in Private Equity"

It is an honour to be invited to speak at Harvard Business School.  The first time that I came to Boston was in 1980. 

31 December 2011

2011 Annual Review Letter

After an encouraging first half, 2011 turned out to be a tough year as further weaknesses in the European banking system were revealed, Europe struggled to find fiscal policy consensus and global recovery speeds became increasingly uneven.

21 November 2011

2011 Q3 Investor Letter (Extracts)

In 2007, the European markets, along with others around the world, were booming. There was a vast amount of equity and debt available. The banking sector was seen as very strong, and expectations of GDP growth were high. Four years on, the world has changed, and Europe in particular is a different place.

02 November 2011

2011 Q3 Investor Letter - TFCP II and III

In 2007, the European markets, along with others around the world, were booming. There was a vastamount of equity and debt available. The banking sector was seen as very strong, and expectations of GDP growth were high. Four years on, the world has changed, and Europe in particular is a different place.

02 November 2011

2011 Q3 Investor Letter - TFDA

In 2007, the European markets, along with others around the world, were booming. There was a vast amount of equity and debt available. The banking sector was seen as very strong, and expectations of GDP growth were high. Four years on, the world has changed, and Europe in particular is a different place.

01 November 2011

Guy Hands' speech at SuperInvestor, Paris - "The best and worst of Private Equity; lessons from the wilderness years"

These are ‘the wilderness years’ for the Private Equity industry in Europe. And we look set to continue to endure, harsh economic conditions and volatile and illiquid capital markets.

01 October 2011

Words from Guy's Rome speech

First, it must be asset-backed.  This helps to protect the value of our investments and limits downside risk.  At present there is an increasing focus on investing in hard assets.  We are lucky as this has always been a core focus of the Terra Firma approach.

01 October 2011

Words from Guy Hands' Speech at Terra Firma's LP Conference, Rome

First, it must be asset-backed.  This helps to protect the value of our investments and limits downside risk.

02 August 2011

2011 Q2 Investor Letter - TFCP II and III

As I have said over the last few years, high levels of volatility in financial markets are set to continue for theforeseeable future.

01 August 2011

2011 Q2 Investor Letter - TFDA

As I have said over the last few years, high levels of volatility in financial markets are set to continue for theforeseeable future.

01 June 2011

Guy Hands' Speech Super Return, Boston - “Private Equity: now we are still here, what does the future hold?”

The Western financial services sector has survived a near fatal shockwave, not seen for over 70 years. 

01 May 2011

2011 Q1 Investor Letter - TFCP II and III

The New Year brought with it the hope of reinvigorated markets and a general sense of economic improvement. Whether the hope of a full recovery will grow into a financial reality in much of the West is something I don’t expect for some time.

01 May 2011

2011 Q1 Investor Letter - TFDA

Despite turmoil in the Middle East, the tragic tsunami and nuclear disaster in Japan, ongoing financial instability in peripheral Europe and volatile oil and commodity prices, financial markets continued to rise in the first quarter.

01 February 2011

2010 Q4 Investor Letter - TFDA

The global economic environment was relatively benign in 2010 after several years of upheaval. The economies in which Terra Firma largely invests continued a slow process of recovery, experiencing modest growth in most sectors.

01 February 2011

2010 Q4 Investor Letter - TFCP II and III

The global economic environment was relatively benign in 2010 after several years of upheaval. The economies in which Terra Firma largely invests continued a slow process of recovery, experiencing modest growth in most sectors. At the same time, financial markets globally continued to recover from their lows of March 2009 and provided greater liquidity across almost every asset class.

01 December 2010

2010 Annual Review Letter

Our immediate task is to continue to achieve strong returns for TFCP II and TFDA and to recover all of the capital for our investors in TFCP III.

01 November 2010

2010 Q3 Investor Letter

My recent letters have set out my concerns about the global economy, and suggested that all investors, particularly illiquid investors, should proceed with great caution. I am afraid that the last three months have done little to change that view.

01 August 2010

2010 Q2 Investor Letter

A colleague of mine used to respond to pretty much any question about the status of any subject by concluding that the answer was finely balanced with a potential to fall either way. As I look at the world today, I find myself having similar thoughts.

01 May 2010

2010 Q1 Investor Letter

I am writing this quarterly letter as the UK General Election results come in. For the last year, I have been predicting a small Conservative majority of approximately 20 seats with a strong possibility of a second election in October.

01 February 2010

2009 Q4 Investor Letter

As we move in to a new decade, many people have been saying good riddance to 2009 and the past decade. Well, 2009 was certainly not great, but it definitely turned out to be a lot better than most people feared and, for the West, the decade ended as a decade lost rather than being a disaster.

01 December 2009

2009 Annual Review Letter

Those who have read our previous annual reviews will know that Terra Firma has always believed that private equity adds value for all its stakeholders through the fundamental improvement of the operations of its investments. In the current environment this is truer than ever, and I therefore wanted to start my letter by providing you with some headlines on what we have achieved in our portfolio.

01 November 2009

2009 Q3 Investor Letter

Based on some of my letters and speeches predicting a smaller private equity industry, some people have concluded that I am negative on private equity. This is certainly not the case. The fact is that the industry needs to shrink because, on the whole, we raised too much capital too quickly.

01 August 2009

2009 Q2 Investor Letter

We are now in the longest and deepest recession of the post war era. It is, therefore, entirely understandable that investors are continually on the lookout for any sign of recovery, the so-called ‘green shoots’. 

01 July 2009

Speech to Investor Dinner - July 2009, Beijing

Private equity can thrive only if it returns to its roots, realigns itself with its investors, and focuses on how to improve the strategic and operational performance of businesses through long-term investment. The recession is not at an end yet; any green-shoots are the result of unprecedented stimulus spending.  There are going to be some extraordinary deal opportunities as over-leveraged governments sell assets.

01 May 2009

2009 Q1 Investor Letter

While the debate continues as to the state of the general economic environment around the world and as to what and who caused the market turmoil, I believe it is imperative that the private equity industry returns to focussing on our businesses of investing and managing capital.

01 February 2009

2008 Q4 Investor Letter

We all know that 2008 was probably the most challenging investment year of our professional lives. The dramatic global decline in stock market values has destroyed more than five years of growth in the value of listed investments.

01 January 2009

Guy Hands' speech at SuperReturn 2009, Paris - “Is the private equity LBO model broken due to falling returns and lack of leverage?"

With $7 trillion of financing up for refinancing in the next few years, the private equity industry is more likely to be in the eye of the storm rather than through it. The contraction will be good for the industry’s long-term health as it will work on fewer deals but focus on driving real operational and strategic value in businesses.  This was hard to achieve in the bubble years, and the effects of leverage disguised when it was missing.

01 January 2009

Wilton Park Speech, 2009

The origins of alternative investments were lost as huge capital inflows made them mainstream.  Too often alternative investments were perfectly normal investments but with greater leverage and less liquidity.  Alignment was replaced by an asset gathering mentality. In future, as the worldwide recession, political realignment and banking crisis create dislocation and opportunity, investors should look for two things: alignment of interest and how the manager adds value.

01 December 2008

2008 Annual Review Letter

I am delighted to present the second Annual Review of Terra Firma and its portfolio businesses.In the time since our last Annual Review, the financial world has changed beyond recognition.

20 November 2008

Speech to Super Investor, Paris - “The Future of Private Equity, how low can returns go?”

In what will be the worst recession since the 1930s, Guy Hands predicts that fund raising in private equity will fall by more than 50%.  However, he sees a vital role for the private equity industry to play in re-establishing growth.  It can help by doing deals which deliver fundamental change, particularly as the stock market correction is now generating substantial investment opportunities.  In order to succeed though, the industry needs to become more transparent to gain the support of the politicians and the public.

01 November 2008

2008 Q3 Investor Letter

Eighteen months ago, private equity was very much in the news. The focus and the attention that private equity was receiving were relentless. The heads of some of the largest funds appeared in front of Parliamentary committees in the UK and Senate committees in the US.

23 September 2008

Speech at Super Return Asia, Hong Kong - “What were the mistakes made by US and European private equity and how might Asian private equity learn from them?”

How three simple rules eventually proved right when the market crashed: what goes up, will come down and may never go up again; you are only as good as your last trade; and politicians will eventually mess it all up.

01 July 2008

2008 Q2 Investor Letter

The evidence continues to mount that the liquidity crunch that began last year will not be resolved anytime soon. There has been nothing but bad news in the financial markets so far this year.

19 June 2008

Guy Hands' speech at the Terra Firma Investor Conference - June 2008, Abbey Road Studios (London)

The markets have entered a ‘perfect storm’ which will impact investments including EMI.  Guy Hands does not see leverage returning and therefore expects that contrarian thinking, operational intervention and strategic redirection will be particularly valuable. 

01 May 2008

2008 Q1 Investor Letter

Most of you know that I have been gloomy about the economic environment for some time. At Terra Firma’s annual conference in 2006, I gave a speech with the main theme “There may be trouble ahead,” in which I pointed out that most in private equity were ignoring the signs of an economic downturn and that we were living in the “Woodstock summer” for private equity.

01 February 2008

2007 Q4 Investor Letter

There seems to be a daily sea of articles and analysis about the causes of the current “credit crunch”. Of course, at this stage, this “credit crunch” is really only the drying up of liquidity for certain types of deal. In my view, the banks are only dealing with a fraction of their true potential credit losses.

01 December 2007

2007 Annual Review Letter

Welcome to the first Annual Review of Terra Firma and its portfolio businesses.

01 November 2007

2007 Q3 Investor Letter

As we are all well aware, the environment that private equity faces has changed dramatically in the last few months. Some weeks ago, I attended a conference for senior LPs and GPs and what I found amazing was how incredibly positive the GPs were on the prospects for private equity over the next few years.

01 November 2007

Guy Hands' speech at the SuperInvestor Conference - November 2007, Paris

After the onset of the credit crunch, the industry is paying for its excesses and the market change ‘is no blip’ and will spill into the broader economy. In the new world where bankers - like dogs - will not come out of their baskets, Guy Hands anticipates that ‘Transformer’ and ‘Focusser’ General Partners will be better investments than ‘traditionalists’ and ‘newbies’.

01 August 2007

2007 Q2 Investor Letter

As we are all well aware, the environment that private equity faces has changed dramatically in the last few months. Some weeks ago, I attended a conference for senior LPs and GPs and what I found amazing was how incredibly positive the GPs were on the prospects for private equity over the next few years.

01 May 2007

2007 Q1 Investor Letter

With the huge amount of capital raised in recent years, combined with highly favourable debt markets, private equity can approach pretty much any target it likes. Furthermore, with the power of equity bridges which are readily available, these numbers actually underestimate private equity’s true potential size.

01 February 2007

2006 Q4 Investor Letter

As a youngster, I was fascinated by those who excelled in their field and each Christmas received a Guinness Book of Records. However, it was never a wholly satisfying read. The records, facts and statistics were good for holiday trivia, but I never learnt the answers to the really interesting questions – what drove these people to achieve their record and how did they achieve it?

24 February 2006

Guy Hands' speech at the Deutsche Bank Conference - 2006

Guy Hands raises concerns about the size of the private equity market, the mega funds within it and the attention it draws from politicians. He predicts the end of the simple formula based on leverage that many have thrived on, instead seeing the need for real value-creation.  He also sees that ‘the market bubble is faltering’.

24 February 2005

Guy Hands' speech at Super Return 24 February 2005, Frankfurt

Increased competition in the market is driving firms to diversify and rely on fees rather than performance.  Terra Firma intends to stay focussed on operational transformation.