At Terra Firma, Guy Hands’ New Private Equity Model Draws Sovereign Wealth Funds

February 25, 2015 by Loch Adamson

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Outspoken leveraged buyout investor Guy Hands is pushing a new compensation model for big institutions like sovereign wealth funds. Will the private equity business be changed forever? To read the full interview with Guy Hands click here. On February 9, 2015, London-based private equity firm Terra Firma Capital Partners, headed by financier Guy Hands, ripped up the fundraising rule book for private equity. Rather than raising yet another fund, the firm announced that it had €1 billion ($1.1 billion) of its own money to deploy in new deals alongside co-investors. The firm’s remuneration will derive almost entirely from performance, not myriad management and service fees. Hands cites three reasons for the move. "Number one, demand; number two, we had experience of a renewable fund not being ready to invest when the market was very cheap and hence missing a great opportunity; and finally having plenty of our own…

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