Terra Firma, the London-based private equity firm spearheaded by outspoken financier Guy Hands, has shelved plans to begin marketing its latest fund during the second quarter of this year in favour of sealing €1bn from one sovereign wealth fund to back its future acquisitions.
According to the Financial Times, the firm has delayed the fundraising for ‘at least another few months’ as it waits for its present portfolio to recover, following a £1.75bn loss incurred following its failed investment in music publishing giant EMI.
Reports in November confirmed that Terra Firma was in talks with sovereign wealth funds so that it could continue making investments after its €5.4bn third vehicle runs out of capital year.
Several sizeable investors from the Middle East and China have approached the firm and proposed to set up a separate fund worth between €500m and €1bn.
In November the group had €700m left from its third fund, excluding capital required for its present portfolio. At the time, Hands was said to be sure that the firm would spend the remaining capital by the end of May.
The firm was hoping to raise up to €3bn for a new fund to be launched early spring 2012, and is said to be mulling a reduced management fee for its latest fund, which is already lower than the private equity industry average of 1.5 per cent.
The firm is already renowned for its amicable fee structure, and does not charge investors for the deals themselves or for advising existing investments.
Terra Firma is currently in exclusive talks to buy the Garden Centre Group, in a sale that is expected to fetch around £300m. The firm clinched exclusivity rights ahead of private equity peers Apax and Duke Street, which also tabled bids for the a 130-store UK garden retail chain.
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