Guy Hands, the buyout tycoon, is plotting a £1bn takeover of Network Rail's commercial property portfolio as the state-owned company seeks to reduce its vast debt-pile.

Sky News has learnt that Mr Hands' Terra Firma Capital Partners is among a large number of investors expected to table initial offers for the assets on Friday.

Network Rail announced last year that it would press ahead with plans to seek a buyer for its Commercial Estate business, which comprises 5,500 properties across Britain.

Its review of the portfolio began in 2015, and has generated huge interest among private investors because of the hundreds of millions of pounds in rent it generates each year.

Image: Guy Hands founded Terra Firma Capital Partners

Many of the sites being earmarked for sale are railway arches which contain small business premises, but rail stations are not included in the auction.


Sources said that Terra Firma was expected to be joined in the bidding by Blackstone, the world's biggest real estate investor; Telereal Trillium, which is owned by the billionaire Pears family; and funds associated with Goldman Sachs, the Wall Street bank.

Bankers expect the auction to fetch as much as £1.2bn, and say more than 20 parties may submit preliminary bids.

Mr Hands' interest in the Network Rail assets comes as he seeks to raise his first general buyout fund since he lost control of EMI, the music company, in 2011.

Terra Firma, which owns companies including Wyevale, the garden centre business, has received bumper returns over the last year from the disposal of renewable energy and aircraft leasing businesses.

However, it has been thrust back into an unwanted public spotlight by the declining fortunes of Four Seasons Health Care, the care homes business which has had to seek new funding from its largest bondholder.

One person close to Mr Hands said the Network Rail assets were "a classic Terra Firma deal".

The financier has made billions of pounds for his investors during the course of his career from property assets, and is said to be confident about the prospects of raising a new multibillion pounds fund.

A recent report by the public spending watchdog said that taxpayers had lost up to £4.2bn by selling off tens of thousands of military homes during the 1990s to Annington Property, a company set up by Mr Hands.

City sources said on Thursday that they did not believe the National Audit Office's conclusion swould adversely affect Mr Hands' hopes of acquiring the Network Rail portfolio.

Speaking last November, Mark Carne, the outgoing chief executive of Network Rail said auctioning the property assets on a leashold basis would benefit local communities.

"I hope to see areas around the railway positively transformed with new and refurbished shops, amenities, and extra facilities for local people and passengers," said Mr Carne.

"The sale will bring a major cash boost to help fund key projects across England and Wales as part of the Railway Upgrade Plan."

Investment bankers at Rothschild are advising Network Rail on the sale.

A Terra Firma spokeswoman declined to comment.