Terra Firma holds final close on €2bn

After 21 months on the fundraising trail, Terra Firma has closed its debut fund on €2bn and is now preparing to invest it in up to ten deals over the next three years.

Terra Firma Capital Partners, the European private equity firm founded by UK financier Guy Hands, has closed it debut buyout fund on €2 billion ($2.49 billion). It is the largest first-time private equity fund ever raised by a European manager. 

 

The closing comes two years after Normura International, Hands' former employer that had funded his operations as head of the Normura Principal Finance Group, agreed to contribute 10 percent of the total that Hands and his team would raise after leaving the Japanese bank.

 

Initially aiming to raise €3 billion, Terra Firma lowered its target to €2 billion one year into the campaign, recognising that market sentiment would make raising the original figure impossible.

 

The firm held a second closing on €1.7 billion in September 2003 before adding another EUR300m to reach the total announced today. A total of approximately 50 institutions invested in the fund, including Wilshire Associates, Partners Group, Horsley Bridge, Adams Street Partners, NIB Capital, Citigroup and Canada Pension Plan. 

 

Guy Hands, who put around €20 million of his personal wealth into the fund, predicted in an interview that it would take up to three years to invest the capital in seven to 10 leveraged transactions.

 

Since inception, Terra Firma has completed one investment, the £530.9 million acquisition of landfill operator Waste Recycling Group in July 2003. The group is targeting deals of around €1 billion in enterprise value and expects to commit up to 40 percent of the fund to continental Europe.

 

Merrill Lynch and Citigroup acted as placement agents during Terra Firma's fundraising.