Terra Firma Boss Beds Down With Malmaison Bid

The buyout tycoon Guy Hands is circling two of the UK's best-known hotel chains in what would represent a rare UK investment since his high-profile ownership of EMI came to an ignominious end.

Sky News has learnt that Terra Firma Capital Partners, Mr Hands' private equity firm, is one of about three remaining bidders for Malmaison Group, which has been put up for sale for more than £350m.

If Terra Firma clinches a deal, it would represent a rare investment in a UK company since Mr Hands surrendered control of EMI, the record label, after it ran into financial trouble in 2010.

Mr Hands, who has been one of the UK's most prominent private equity investors during the last two decades, launched a lengthy legal battle over the fate of EMI, with the latest phase scheduled to reach court later this year.

Terra Firma's portfolio now includes Four Seasons, a healthcare group, Odeon Cinemas and Wyevale Garden Centres, with at least two of those businesses likely to be sold in the next 18 months.

The tycoon's copybook was blotted by his decision to buy EMI almost a decade ago, although he has pointed out that Terra Firma's other funds have returned handsome sums to their investors.

If Mr Hands' bid for Malmaison, which also owns the more upmarket chain Hotel du Vin, is successful, it would pit him in opposition to his wife, Julia, who runs the boutique group Hand Picked Hotels.

KSL Capital Partners, which acquired Malmaison Group in 2012, has decided to sell the business, with an auction being run by advisers at the investment bank UBS (NYSEArca: FBGX - news) .

Among Terra Firma's rival bidders is TDR Capital (Other OTC: CGHC - news) , the private equity group which owns David Lloyd Leisure.

Malmaison's sale comes just two years after its former parent collapsed.

Hotel du Vin and Malmaison, which trade from nearly 30 sites across the UK, were previously owned by MWB Group, which fell into administration in November 2012.

Employing approximately 3,000 people, Malmaison recently acquired the historic Cannizaro House in southwest London, and will invest £1m in renovating the property before reopening it under the Hotel du Vin brand.

Other sites, including Great Scotland Yard in central London, are also in the process of being acquired, underlining the growth ambitions of the company’s management team.

Hotel du Vin and Malmaison have become prominent players in the hospitality sector, specialising in converting well-known local landmarks such as a former castle prison, hospital and sugar refinery, into boutique hotels.

KSL, which also owns The Belfry, one of the UK's leading golf courses, is also participating in a consortium which wants to buy Center Parcs, the holiday resorts operator.

Terra Firma declined to comment on Monday.