Banks, Financial

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Economy

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Financial

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Financial

Travis Perkins and Polymetal to lose out in FTSE 100 reshuffle

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Banks

RBS share drop accelerates on stress test flop

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Categorized | Financial

Terra Firma seeks €1bn from sovereign fund


Posted on February 29, 2012

Guy Hands

Terra Firma Capital Partners has dropped plans to start fundraising this spring. The private equity group, run by British financier Guy Hands, is seeking instead to collect about €1bn from a single sovereign wealth fund to keep doing deals.

The group, which made headlines with its failed investment in music group EMI, is delaying the start of its next fundraising effort for at least another few months, people familiar with its plans said.

They added that Mr Hands wants to wait for further recovery of Terra Firma’s third fund portfolio before asking investors to commit fresh capital.

The fund, a €5.4bn vehicle that was raised at the height of the buy-out boom five years ago and suffered £1.75bn in losses from the EMI deal, increased its value by 16 per cent last year.

But it is still far from breaking even, being worth 40 per cent of initial cost last year. The group is targeting an increase in value to 60 per cent this year and wants to bring the fund back to par by 2015.

The move to delay the fundraising of up to €3bn, due to begin this spring, underlined how some private equity groups have been forced to scale down.

It emerged in February that UK mid-market group Duke Street had dropped attempts to raise an £850m fund amid a lacklustre performance of its previous fund. Only a few weeks later, larger UK buy-out firm BC Partners announced it had successfully collected €6.5bn in fresh capital.

Several large investors have warned that Terra Firma might struggle with a protracted multiyear fundraising effort. “The longer they wait, the better,” one industry executive said.

Terra Firma declined to comment. When asked at a conference in Berlin about the group’s ability to raise a fund, the 52-year-old founder said: “I am 100 per cent confident.”

The buy-out group’s third fund, which includes investments such as CPC, an Australian beef producer, and Awas, one of the largest global aircraft leasing companies, has about €500m left for new deals.