Guy Hands, one of the UK's most well-known buyout firm bosses, is set to make a £1bn swoop for Network Rail's commercial property portfolio.
Hands's private equity firm, Terra Firma, will be battling against giants such as Blackstone, the billionaire Pears family's Telereal Trillium and funds associated with Goldman Sachs, Sky News has reported, as initial offers are set to be tabled on Friday.
Network Rail announced last November that it had kicked off the sale of its hefty commercial property portfolio, in an effort to provide "a significant injection of cash" and reduce its weighty debt pile.
Some 5,500 properties in England and Wales will be included, the majority of which are railway arch spaces which generate hundreds of millions of pounds in rent per year. Network Rail has talked about selling the division, which it has called "non-core", as far back as 2015.
According to Sky News, bankers expect more than 20 parties to submit preliminary bids and the sale could attract up to £1.2bn.
Hands, whose name became well-known when he attempted to sue Citigroup over his "disastrous" investment in music label EMI, is currently attempting to raise a new fund for Terra Firma.
But the firm has suffered recently from the write-off of Four Seasons Care Homes, as its equity stake in the struggling business was rendered near-worthless.
Familiar hunting grounds
Moving back to property would put hands in familiar territory. In 2012, Terra Firma bought the Annington Homes military housing group from Hands’ former employer, Japanese bank Nomura.
However the deal has recently been criticised by the National Audit Office (NAO), which has warned that the Ministry of Defence (MoD) lost out on billions of pounds by selling the properties and could face huge costs as Terra Firma-backed Annington hikes rents.
Annington was formerly leasing the properties to the MoD at a discount, which was agreed when the portfolio was sold.
But the current agreement expires in 2021, and the NAO has said that there may be a significant mismatch between the returns Annington is expecting and what the MoD may be prepared to pay.
Annington is also making moves into the private rental market, which could prove more lucrative.