BERLIN Feb 25 British buyout group Terra Firma
will shortly launch a 2 billion euro ($2.75 billion)
general private equity fund, two people familiar with the matter
The fund will take the size of Terra Firma's endeavour
nearer to its roots following ill-fated larger ambitions at the
height of the buyout boom.
Terra Firma, controlled by British financier Guy Hands, will
start fundraising in May. The new fund will target deals with
equity cheques of 750 million euros, half of which will be
supplied by the fund and half from co-investors, sources said.
Terra Firma has done more than 30 transactions in the last
20 years and its smaller deals have generally been more
successful, one of the people said, adding: "Leverage tends to
be lower in smaller deals and it is easier to change those
Terra Firma declined to comment.
In 2004, Terra Firma raised a 2.1 billion euro fund, which
invested among others in German motor services group Tank &
Rast, which it recently refinanced. That fund also acquired
cinema operator Odeon & UCI, which it unsuccessfully tried to
sell in 2011.
The firm's 5.4 billion euro fund raised in 2007, however,
included a disastrous investment: the 6-billion-euro acquisition
of music group EMI, which Terra Firma later handed back to
Citigroup after defaulting on some loans.
Hands claims a Citigroup banker induced him to overpay for
EMI at the height of the buyout bubble by falsely
telling him a high bid was needed to top a rival bidder.
He has sued the bank, which has denied wrongdoing, but it
remains unclear if the trial will start this summer.
In a special fund established in 2006 Terra Firma holds
German real estate group Deutsche Annington, of which
it listed a stake on the stock exchange last summer. The share
has risen nearly 14 percent since the flotation.