Cerberus Capital Management is looking to raise money
for a variety of funds. The private equity-hedge fund firm best
known these days for its investments in Chrysler and GMAC, is
trotting out a successor version of hedge funds Cerberus
International and Cerberus Partners, which are currently in
liquidation. Investors who receive proceeds for the old funds
can roll them into the new ones. However, sources say a
majority of investors are choosing to take the money.
Cerberus is also trotting out new loan funds that are
successors to the firms Styx and Ableco products.
In addition, it is offering Cerberus Institutional Partners
Series V, which is a successor to Cerberus Institutional
Partners LP Series IV, which had raised $7.5 billion in 2006
and 2007, perhaps the worst time for private equity. Series IV
is winding up its investment period in November, having been
extended a year.
And finally, Cerberus is introducing a new mortgage backed
securities fund. The hedge fund will mostly invest in liquid
residential mortgages, sources say.
Keep in mind the firm made $2 billion in this market in 2009
and 2010 when the housing market started to recover, taking
advantage of the dry powder and the long lockups in its private
equity fund to do the trading.
Cerberus refused to comment.
Cerberus, named for the three-headed dog that guards the
gates of Hades, was founded in 1992 by Stephen Feinberg, a
former distressed-debt trader at Drexel Burnham Lambert.
Cerberus currently manages $22.2 billion, including $10.3
billion in private equity-distressed funds, $8.8 billion in
liquid funds and $1.2 billion in real estate funds.
In 2007, Cerberus led a group that paid $7.4 billion for 80
percent of Chrysler. Cerberus did not put up all of the money.
In 2006 it bought 51 percent of GMAC, also for $7.4 billion.
Its stake in GMAC and Chrysler were reduced when the Federal
Government provided emergency funding through its Troubled
Asset Relief Program (TARP).
Since then, the U.S. auto business has improved. And sources
say Cerberus hopes to recover most of its investment in
Chrysler after Toronto-Dominion Bank closes its acquisition of
Chrysler Financial, which it had agreed to buy for about $6.3
billion in cash.
It wont be known how much it recovers from GMAC.
However, Thursdays announcement that Ally Financial, the
former finance arm of General Motors is planning an initial
public offering enables Cerberus to move closer to recovering
more of its investment.
Meanwhile, Cerberus figures to make about $2 billion, or 27
times its investment made several years ago in Talecris
Biotherapeutics Holdings, a biopharma company that makes drugs
from plasma, among other things. Grifols, a Spanish holding
company specializing in the hospital-pharmaceutical sector,
agreed to buy the company and the deal is currently awaiting
Federal Trade Commission approval. It has already taken out a
lot of money from dividend payments.