za FT

Terra Firma, the new private equity firm set up by Guy Hands, has expressed
a tentative interest in parts of Bankgesellschaft Berlin, if the troubled
German regional bank goes through some sort of break-up.

Mr Hands, who ran Nomura's principal finance operation before he went
independent in April, is raising a E3bn ($2.7bn) fund, about 40 per cent of
which will be invested in Germany.

The firm would not bid for all of Bankgesellschaft. "They are not interested
in buying the whole shooting match," said a source close to Terra Firma.
Instead it was "keeping an eye on things" in case the Berlin government
decided to opt for a break-up of the assets.

It is unclear which part of the bank might appeal to Terra Firma. The city
of Berlin, which owns 81 per cent of Bankgesellschaft, is planning to sell
its stake in the debt-laden lender, and said last week that there four
interested parties, but refused to give details.

Terra Firma will be keen to show potential investors it is involved in
German deals, analysts said. Some investors question whether Mr Hands will
be able to spend 40 per cent of the fund in Germany, which has been slow to
open up to private equity deals. They also point out that Mr Hands has only
done one German deal to date.

Earlier this month Christopher Flowers, the US-based investment banker,
joined forces with Texas Pacific Group, a private equity company, to bid
jointly for the bank. The only other group known to be interested is a
consortium of German banks involving NordLB, a state owned bank, and the
DSGV savings bank association.

The Berlin city government refused to comment on Sunday on Terra Firma's
expression of interest.


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Amra the Freelancer
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