Hands ups stake

Ongoing discussions in the market surrounding large-cap buyout fund performance and LP allocation issues were given renewed vigour recently, when news broke that Terra Firma chief Guy Hands had bought out three investors in the firm's latest fund.

Terra Firma's management company, tightly controlled by Hands, is thought to have acquired the three interests - collectively representing EUR25m in funded and unfunded commitments - for a negligible value. Marketed by some as representing Hands' confidence in the fund's future performance, the low purchase price has been touted by others as an indication of the investors' desperation to escape the vehicle, which includes in its portfolio heavy indebted music publisher EMI.

Hands, via the management company, was already one of the four largest investors in Terra Firma's EUR5.4bn third fund, which closed in January 2007, having made a contribution of EUR200m.

The three investors that sold their interests were not named, but were said to comprise two institutional investors and one family office.

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