Guy Hands, the founder of Terra Firma, the venture capital owner of EMI, is to step aside as chief executive to spend more time focusing his attention on the firm's investment portfolio.

The expansion of Terra Firma means that Mr Hands no longer feels he has the time to run the business, which employs 110 people and manages €11billion on behalf of 200 investors, as well as monitor the progress of EMI and its other companies.

Tim Pryce, previously Terra Firma's general counsel and a founding partner of the firm, will step up to become chief executive. Mr Hands will retain the key roles of chairman and chief investment officer.

“If the day comes that EMI is to be sold, then it will still be Guy Hands who ultimately takes that decision,” one insider said. Mr Pryce will concentrate on handling Terra Firma's staff and its outside investors, which are essentially senior administrative tasks.

Mr Hands is under pressure to demonstrate that he can make money out of EMI, one of the last companies to be acquired in the era of cheap money, provided in this instance by a “covenant-light” £2.7billion loan supplied by Citigroup.

In its annual review, Terra Firma cut the carrying value of EMI by about half, to about £1.2billion - an acknowledgement that the company was not worth what was paid for it in 2007 in a £4billion cash-and-debt deal.

Hits from Coldplay and Katy Perry helped to lift underlying profits in the first nine months of the 2008-09 financial year by 146 per cent to £221million. That figure excludes interest charges, which ran to £165million for the full 12 months in 2007-08.

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