Terra Firma is reportedly planning to raise a fund of up to $5bn (€3.86bn) with China Development Bank to invest in renewable energy.
Reuters broke the news, reporting that the partners are expecting to raise between $3bn and $5bn in the next few months.
Terra Firma has put off raising another fund since the high-profile loss of EMI, which consumed nearly a third of its Fund III, and fell into the hands of its lenders after breaching loan covenants. Guy Hands, chairman and chief investment officer of Terra Firma, failed in his attempt to sue Citigroup for its role in advising on the original investment.
Hands is under pressure. He has reduced the investment team by half to 70 people and is struggling to retain key members. Last year he invested £20m (€24m) of his own money, a third of his estimated £93m fortune, into Terra Firma's troubled third fund in a bid to keep staff.
He has announced that the firm would focus on investing in energy and infrastructure. The firm has three portfolio companies in the space – landfill gas producer Infinis, EverPower, a wind farm group, and Italian solar power business Rete Rinnovabile.
In recent weeks a number of mega cap firms have reacted to faltering fundraising efforts by selling equity stakes. CVC Capital Partners sold a ten per cent of its management company to a sovereign wealth fund, followed by Providence Equity Partners, which also sold a minority stake.