Terra Firma holds E1.7bn second close

The firm has added E700m at the second close of Terra Firma Capital Partners II ahead of a E2bn final close scheduled for early 2004.

Terra Firma, the UK-based private equity firm headed by Guy Hands, has held a second close of Terra Firma Capital Partners II, the firm’s debut independent fund.

The fund has raised an additional E700m at the second close, adding to the E1bn closed in November 2002. A spokesperson for the firm said the plan was to hold a further close on E1.9bn in November, ahead of a E2bn final close in early 2004.


The firm has not revealed the identity of the fund’s latest LPs. Investors already in the fund include Adams Street Partners, Citigroup, GE Structured Finance, NIB Capital Private Equity and three public sector investors, one in the US and two in Asia. The Canada Pension Plan Investment Board has also contributed around E150m to the fund.


The second close will be welcomed by Terra Firma, which earlier this year revealed that the fund’s initial target of E3bn would be reduced by a third, the result of the difficult fundraising climate. At the time, Hands said it would be an “incredible achievement” to surpass E2bn.


The firm also suffered a setback in terms of its dealmaking. In late 2002, the firm was set to acquire a E1.9bn portfolio of social housing in Cologne until the transaction fell through at the last hurdle as a result of political quarrels at Cologne’s city council.  


The firm’s first deal from Terra Firma Capital Partners II was the £315m public-to-private acquisition of UK-based landfill operator Waste Recycling Group.


The spokesperson for Terra Firma said the fund had benefited from “slightly improved” fundraising conditions. “Those who said no a year ago are now saying yes as they get to know Terra Firma better,” he added.


The news comes a day after Doughty Hanson held a first close of its fourth fund, reaching E700m on the way to a final target of E3bn. Permira, Carlyle and 3i are also raising multi-billion euro funds.


Merrill Lynch and Salomon Smith Barney are the placement agents for the fund.