LPs give Terra Firma two-year extension to complete Fund II exits


exit sign_sqEuropean private equity firm Terra Firma has been given an extra two years to exit its investments from its €2bn second fund, it is understood.

Terra Firma Capital Partners II could now hold investments until 2016 to avoid having to exit them ahead of reaching prime valuations according to Bloomberg, which cited two people with knowledge of the talks.

It said that in exchange Terra Firma had agreed to waive the 1.5 per cent management fee for the period, although will retain its planned share of any profits.

TFCP II, the firm’s first vehicle after spinning out of Nomura in 2002, was the largest debut fundraising in Europe at the time despite being downsized from its initial €3bn target.

Investors in the fund include Wilshire Associates, Partners Group, Horsley Bridge, Adams Street Partners, NIB Capital, Citigroup and Canada Pension Plan.

Bloomberg said last week’s exit of Northern Irish gas distribution business Phoenix meant it had returned all the invested capital from Fund II.

In January it emerged Terra Firma founder Guy Hands was planning to return €3bn to investors through exits up until mid-2014 ahead of plans to raise two new funds.

A green energy infrastructure vehicle will seek commitments of €3bn according to the Financial Times, less than the €5bn planned after talks with China Development Bank on committing to the vehicle failed to reach fruition last year.

It said Hands had also sounded out LPs about committing to a new €2bn to €3bn buyout fund, which he could begin marketing as soon as next year.

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