News & Analysis

Hollyport acquires Terra Firma stakes

The tail-end specialist has acquired stakes in the UK buyout fund’s first independent fund, which invested in EMI Group, a music company.

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Hollyport Capital has acquired a stake in a Terra Firma Capital Partners fund that invested in music company EMI Group.

The tail-end specialist bought the interest in Terra Firma Capital Partners II (TFCP II) from Citigroup Employee Fund of Funds, according to a UK regulatory filing. Hollyport used its 2015-vintage Secondary Opportunities V fund, which closed above target on £187.5 million ($234 million; €219 million), according to PEI data.

TFCP II was the UK buyout firm’s first independently-raised fund after its 2002 spin-out from Japanese bank Nomura. The €2.1 billion vehicle holds two remaining assets: aircraft leasing firm AWAS and renewable power generator Infinis, according to Terra Firma’s website.

Along with its predecessor Terra Firma Capital Partners III, TFCP II invested just over €6 billion in EMI in a 2007 deal that subsequently lost Terra Firma about £1.75 billion of equity when Citigroup, which had provided loans to fund the buyout, seized the company after Terra Firma defaulted on the loan.

TFCP II had a 14 percent internal rate of return and a 1.8x return multiple as of 30 June, according to an investment report from the North Carolina Retirement Scheme, which committed $98 million to the vehicle.

Terra Firma and Hollyport declined to comment.

– Adam Le contributed to this report.