While much attention is set firmly on whether or not Terra Firma's ownership of EMI will be torpedoed by the 2.7 billion pounds ($4.23 billion) it borrowed from Citigroup, the investment firm is not the only institution with funds at risk in the deal. Some of the investors backing EMI acts like Katy Perry, Norah Jones and Lenny Kravitz, through Terra Firma's investment vehicles, are large New York City public employee pension funds.

This information comes from documents filed in conjunction with a lawsuit over the controversial deal between Terra Firma and Citigroup. In a lawsuit filed Dec. 11, initially in the New York State Supreme Court and now in the U.S. Federal Court for the Southern District of New York, Terra Firma alleges that Citigroup had lied when it said there was a rival bidder for EMI. Terra Firma says that information caused it to make a higher bid for the major music company, which it acquired in 2007.

In addition to borrowing funds from Citigroup to finance the deal, Terra
Firma made a $2.35 billion (1.5 billion pound) investment in EMI through two of its investment funds - Terra Firma Fund II and Terra Firma III. Both of those funds mainly represent pension funds, life insurance companies, college endowments and other institutional investors.

The court documents don't say which institutional pension funds are in which Terra Firma funds, but it does provide names. More than 100 U.S.-based funds account for 24% of the investments in EMI, including New York Life Insurance, Teachers Insurance and Annuity Assn., Montana Board of Investments, Cornell University, the University of California and public pension funds from Colorado, Indiana, North Carolina, Oregon and New York.

Of those state funds, four New York City pensions - NYCERS, NYC Fire, NYC Police and NYC Teachers - have committed $100 million (63.9 million pounds) to the original deal. (Though Terra Firma has only drawn $60 million of that, or 1% of EMI, at this point). Those figures are from a declaration that Inga Van Eysden, chief of the pension division of the New York City Department of Law, filed in support of keeping the lawsuit in the New York federal courts.

"Therefore, the city of New York including hundreds of thousands of NYC employees and retirees on whose behalf the assets of the member-financed NY pension funds are invested, has a direct and substantial economic interest in the outcome of the litigation" of Terra Firma's claims against CitiGroup, Van Eysden said.