In an exclusive interview with Financial Sunday Express, Hands says he passionately believes in Le Meridien, which owns the London Grosvenor House site, but admits it was "the right deal at the wrong time".

He adds: "Le Meridien has a great international name, fine properties and some terrific staff but the timing was about as bad as you could get. We have had everything but a plague of frogs, but it is still the right company - it is just very sad."

Hands, 43, led a GBP 1.9billion deal to buy Le Meridien two years ago when he worked at Nomura, investing GBP 213million for the Japanese investment bank to take a majority stake. But the deal was sealed a month before September 11 dealt a devastating blow to travel and tourism.

The Sars outbreak caused further woe and Nomura has written off its investment as worthless. Le Meridien, with debts of about GBP 1billion, is in talks with its lenders about a rescue. Hands' new venture Terra Firma is considering injecting a sum, thought to be about GBP 100million, to keep the business afloat, provided the banks agree to wipe off some of its debt.

"We are in friendly talks about the terms on which we would put in equity, " he said. "Every decision has to be made on economic merit. I can put in money only if it makes sense. I passionately believe in the company and the business staying together but that's up to the banks. The gestation period for restructuring a company is about 20 months, so we are in the very early days of pregnancy."

Hands defends himself against criticism that the Le Meridien debacle meant he was losing his so-called Midas touch: "I would say if I could have predicted Sars and September 11 I would indeed be 'golden' in terms of making money. But no one would be able to predict such things."

The Meridien deal is not Hands' only headache. He is working hard to buy Doncaster-based Waste Recycling Group for GBP 640million. It would be his first deal since leaving Nomura last year to start Terra Firma. If he closes the deal by Tuesday he will still receive a break fee, even if Waste Recycling ends up accepting a higher offer.

But Hands is in no rush: "We haven't put in a formal bid yet. We are looking at several deals, including Waste Recycling but it is a question of which is the right one. It could take six months to find it."

Hands' caution could also be down to his gloomy view of the economy: "I think it will do substantially worse than predictions, stabilising around its present level, with the Footsie at 3500-4500 and the economy showing insipid growth of 1 to 1.5 per cent. The market will be very punishing of wrong deals; very rewarding of the right ones."

Multi-millionaire Hands is philosophical about his career. "Success in investing comes down to having the confidence to make the right decisions and being willing to learn from the wrong ones and realising you can't always be right, " he says.