Cerberus approaches $3bn for distressed fund

The sixth distressed fund from New York private investment firm thought to be nearing its hard-cap.

Cerberus Capital Management is understood to have raised about $3 billion on its distressed fund, Cerberus Institutional Partners VI. The fund was launched in 2015 and has a hard cap of $4 billion.

Boston-based Monument Group, iCapital Securities and Axius Partners of Australia are acting as placement agents for the fund, according to SEC filings.

A Cerberus representative declined to provide more detail on the fund.

Institutional Partners VI has secured investments from the Pennsylvania Public School Employees Retirement System (PSERS), the University of Louisville endowment and others. The fund is also reportedly one of four funds being considered for a $100 million allocation from the Louisiana State Employees Retirement System.

Cerberus plans to build a portfolio of up to 200 investments for Institutional Partners VI, primarily targeting opportunities in North America and Europe with the possibility of some investments in Asia, according to documents on the fund prepared for PSERS. The fund will have an investment period of four years and focus on distressed assets including non-preforming loans, residential and commercial mortgage assets and securities, corporate debt and structured loans.

In January, Cerberus hired former Apollo managing partner David Abrams to lead its search for distressed opportunities in Europe and the emerging markets.

Institutional Partners VI's predecessor, Institutional Partners V, closed in April 2013 on $2.61 billion, short of its $3.75 billion target. That fund had an annualised net internal rate of return of 29.3 percent and counted the California Public Employees Retirement System among its investors.

The Cerberus fund is one of several distressed funds currently vying for commitments from institutional investors. Apollo is marketing a distressed fund with a $3.5 billion target, CVC Credit Partners recently reached a $558 million first close on its Global Special Situations Fund and last month MHR Fund Management reached a $1.6 billion third close for its distressed fund.

Cerberus is a New York based private investment firm with $30 billion in assets under management. In addition to managing private equity and hedge funds, the firm also focuses on distressed debt and deep value investing. Cerberus maintains affiliate/ advisory offices in Los Angeles, Chicago, London, Belfast, Dublin, Frankfurt, Madrid, Beijing, Tokyo and Baarn, the Netherlands.