Terra Firma on shaky ground

Terra Firma chief Guy Hands is to give up his role as CEO after seven years. He will retain his position as group chairman of the buyout house and also take up the role of chief investment officer. Tim Pryce, a founding member of Terra Firma, will take on Hands' role as CEO. Both previously worked together at Nomura.

The news comes just weeks after press reports claimed that Terra Firma's management company had purchased three interests in the firm's EUR5.4bn latest fund - collectively representing EUR25m in both funded and unfunded commitments - for a negligible value.

This move had been marketed by some as representing Hands' confidence in the fund's future performance, while the low purchase price has been touted by others as an indication of the investors' desperation to escape the vehicle. The three investors that sold their interests were not named, but were said to comprise two institutional investors and one family office.

The firm has also reportedly written off around EUR1.39bn from the value of its portfolio, with music group EMI thought to be primarily responsible for the loss. Terra Firma acquired EMI in September 2007 in a EUR4.7bn deal, with the equity cheque thought to be around EUR2.2bn. Speculation in the press suggests that the investment was written down by half.

Hands himself was also reported as having given up his £40m bonus as part of a wider move to give back to investors £70m of performance fees earned since 2004.

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