The head of one of Europe's biggest private equity groups yesterday painted a bleak picture for his industry, predicting substantial job cuts at buy-out firms, as they suffer heavy losses on many recent deals, sparking lawsuits with some investors.

Guy Hands, head of Terra Firma and one of the buy-out industry's most outspoken figures, courted controversy again by saying there was plenty of room for job cuts, as "90 per cent of people you have hired are not money-makers".