News & Analysis

Cerberus pulls in over $3bn for distressed fund – exclusive

The committed money comes from a mix of foreign and domestic investors, including Louisiana and Pennsylvania pensions.

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Cerberus Capital Management has raised $3.26 billion for the sixth iteration of a flagship fund, a multi-strategy investment vehicle launched in 2015, a source familiar with the matter told Private Debt Investor.

The New York-based investment behemoth has raised $2.1 billion from domestic investors and $1.16 billion from abroad for its Cerberus Institutional Partners VI (CIP VI), a source familiar with the situation said. The source did not specify when a final close for the fund, which carries a $4 billion hard-cap, may occur.

A Cerberus spokesman declined to comment on the numbers.

According Pennsylvania Public School Employees’ Retirement System investment documents, the pool of capital will be put toward private equity and distressed debt investments, which include corporate loans, structured loans, non-performing loans and mortgage securities. In January, David Abrams, formerly of Apollo Global Management, joined Cerberus to look at distressed investing opportunities in Europe and emerging markets.

The fund will make between 100 and 200 investments with a focus on North America, Western Europe and Asia and has a four-year investment period. In early June, CIP VI neared the $3 billion mark, already posting better numbers than its predecessor, CIP V. The fifth flagship fund had raised $2.61 billion, far short of its $3.75 billion target.

According to PDI data, among the limited partnerships that have made allocations to CIP VI are the Louisiana State Employees Retirement System, which committed $125 million; and the Pennsylvania Public School Employees’ Retirement System, which set aside $200 million for CIP VI. The latter has a longstanding relationship with Cerberus, as the Harrisburg, Pennsylvania-based pension fund previously made investments with all but the first of the CIP funds.

The fundraising total comes amid several people moves within the Cerberus corporate umbrella. In August, Kevin Genda, the founder of Cerberus Business Finance, the firm’s mid-market lending platform, stepped down to start his own firm after spending more than two decades at Cerberus. Earlier this month executives from FirstKey Lending, a Cerberus affiliate, transitioned to a new real estate investment firm, Allegiant Real Estate Capital.