Terra Firma, the private equity group led by high-profile dealmaker Guy Hands, is planning a fund of up to $5 billion with China Development Bank for investments in renewable energy, a person familiar with the situation said.

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

Terra Firm declined comment.

After suffering the bruising loss of music group EMI to Citigroup last year after Terra Firma defaulted on loans from the lender, the new fund presents a chance for Hands to repair Terra Firma's tarnished reputation by refocusing on core investments in area including energy and infrastructure.

Terra Firma owns three renewable energy companies - landfill gas producer Infinis, US wind farm group EverPower and Italy's leading solar power generator Rete Rinnovabile - and has done successful deals in utilities and waste management.

China Development Bank will market the fund in China to potential investors, while Terra Firma will seek backers in Europe and the United States among traditional private equity investors and infrastructure fund investors, the person said.

Terra Firma, whose last investment was the 825 million pounds ($1.34 billion) purchase of care homes operator Four Seasons in April, put plans to launch a buyout fund on ice earlier this year after scant interest from its private equity investors.