Terra Firma’s Guy Hands to lead MBO of Fund III asset

Guy Hands, founder and chairman of UK-based private equity firm Terra Firma Capital Partners, is set to lead a management buy-out of Australian cattle enterprise Consolidated Pastoral Company.

CPC is owned by Terra Firma’s 2007-vintage €5.38 billion Terra Firma Capital Partners III, which has been trying to sell the company’s portfolio since March last year in a process managed by Goldman Sachs and Knight Frank.

Hands and his family will provide a cornerstone commitment alongside CPC management in the proposed deal. Other investors will be invited to participate in the buyout, CPC said in a statement.

The size of the Hands family commitment or the equity stakes to be taken by CPC management have not been disclosed. The management buyout is understood to be worth as much as A$600 million ($407 million; €369 million).

CPC declined to comment beyond its official statement.

It is understood that the firm initially favoured a sale of the portfolio in its entirety but this proved challenging. Instead, Terra Firma succeeded in selling off 10 individual properties to buyers including Cleveland Agriculture, Vietnamese investment group Clean Agriculture and International Tourism, and cattle station operator Sterling Buntine.

This reduced the size of its portfolio from 16 properties covering 5.5 million hectares to six properties covering approximately 3.2 million hectares of land.

Its chief executive Troy Setter said: “This is a great outcome for CPC. Long-term patient capital will enable us to continue to invest in our people, our land and our cattle which will not only benefit CPC but the broader agricultural industry in Australia.

“I look forward to continuing to work with the Hands family, our team and our local communities to build on the great business we have today well into the future.”

Terra Firma purchased CPC, the largest privately owned beef producer in Australia, in 2009 in a deal worth €327 million, according to the buyout firm’s website. At the time, the asset was an “under-managed and under-invested business,” the website notes.

Over its 10-year ownership, Terra Firma developed the company by acquiring tracts of property, growing station capacity, streamlining the supply chain and investing in technology such as genetics as well as for drought-proofing.