In the midst of trying to raise more money from investors so that Terra Firma doesn't default on its loans for EMI, Terra Firma boss Guy Hands said at an industry conference yesterday that private equity firms will have a difficult time raising capital in 2010. Hands told delegates at a Berlin conference that investors are likely to allocate 20 percent to 30 percent less capital to buyout firms this year, and he expects heightened scrutiny of financial models and operational teams assigned to such investments.

"If ever there was a time when past performance is not going to be an indicator of future performance, now is that time," said Hands, according to the New York Post. "Even the most experienced will have to approach fund raising as if this were their first fund."

While Hands never mentioned EMI, his plea for investors to ignore past performance was interpreted by some as an admission that his $6 billion bet on EMI, which he bought in 2007, has been a failure, notes the Post. As previously reported, Terra Firma is currently trying to raise $180 million from investors to avoid failing a debt covenant test at the end of March. If that happens, EMI could become the property of Citigroup, the bank that holds the debt. It also was recently reported that EMI could be eyeing more cost-cutting measures.