Terra Firma plans up to $5 bln renewable energy fund-source

By Simon Meads

LONDON, Oct 8 (Reuters) - Terra Firma , the privateequity group led by high-profile dealmaker Guy Hands, isplanning a fund of up to $5 billion with China Development Bank

for investments in renewable energy, a person familiarwith the situation said.

The partners are expected to start raising between $3 and $5billion in the next few months, with the Chinese bank to put anas-yet-undefined amount into the fund, the person added.

Terra Firm declined comment.

After suffering the bruising loss of music group EMI toCitigroup last year after Terra Firma defaulted on loansfrom the lender, the new fund presents a chance for Hands torepair Terra Firma's tarnished reputation by refocusing on coreinvestments in area including energy and infrastructure.

Terra Firma owns three renewable energy companies - landfillgas producer Infinis, U.S. wind farm group EverPower and Italy'sleading solar power generator Rete Rinnovabile - and has donesuccessful deals in utilities and waste management.

China Development Bank will market the fund in China topotential investors, while Terra Firma will seek backers inEurope and the United States among traditional private equityinvestors and infrastructure fund investors, the person said.

Terra Firma, whose last investment was the 825 millionpounds ($1.34 billion) purchase of care homes operator FourSeasons in April, put plans to launch a buyout fund on iceearlier this year after scant interest from its private equityinvestors.($1 = 0.6176 British pounds)

(Reporting by Simon Meads; Editing by David Holmes)

((simon.meads@thomsonreuters.com)(+44 20 7542 9969)(ReutersMessaging: simon.meads.thomsonreuters.com@reuters.net))