* Cerberus has raised over $11 bln over the last two years
* First completed PE fundraising since plans for Freedom
* Cerberus partners may bid for gunmaker Freedom
By Greg Roumeliotis
NEW YORK, May 1 Cerberus Capital Management LP
has completed fundraising for its latest flagship private equity
fund, raising $2.61 billion to invest in distressed assets, two
sources said, bringing the capital Cerberus has raised from
investors in the last two years to over $11 billion.
Cerberus Institutional Partners V (CIP V) is also the first
Cerberus private equity fund to complete fundraising after the
firm said in December it would sell Freedom Group Inc, the maker
of the Bushmaster rifle that was used in the shootings at Sandy
Hook Elementary School in Newtown, Connecticut.
Cerberus started marketing CIP V in 2011 with a $3.75
billion fundraising target, and later moderated its expectations
to between $3 billion and $3.5 billion.
There is no evidence that the Freedom Group controversy
weighed on the CIP V fundraising, one of the people familiar
with the matter said. Both people spoke on condition of
anonymity because the details of the fundraising are
confidential. A Cerberus spokesman declined to comment.
Following the Newtown massacre, Cerberus came under public
pressure to sell Freedom Group and moved quickly to announce it
would divest it. The firm's chief executive and co-founder
Stephen Feinberg, along with other Cerberus partners, may make a
bid for the gun maker to ensure the sale does not occur at an
unfairly low price for its investors, sources told Reuters last
The capital of over $11 billion Cerberus has raised from
investors in the last two years includes fund offerings in
structured products, non-performing loans,
mortgage-backed-securities and distressed corporate debt.
CIP V invests in private equity assets that include
operational turnarounds and distressed situations and securities
that include distressed corporate debt and mortgage investments.
CIP V's predecessor, the $7.5 billion CIP IV that was raised
in 2006, was valued at 1.33 times its investors' money and had a
net internal rate of return of 7.3 percent as of the end of June
2012, according to the University of California, a Cerberus
This was a stronger performance than most of the private
equity funds of a 2006 vintage that the University of California
had in its portfolio. The University's total private equity
portfolio, across all vintages, was valued at 1.6 times the cost
its original investments.
In the first quarter of 2013, 129 private equity funds
reached a final fundraising close, raising a total of $67
billion, compared to the 203 funds that raised a total $79
billion in the first quarter of 2012, according to market
research firm Preqin.
Founded in 1992 and named after the mythical many-headed dog
that guards the gates of the underworld, Cerberus has
specialized over the years in investing in distressed companies
and debt. It now has over $20 billion of assets under
Cerberus, which is best known for its one-time investment in
Chrysler, has investments in a range of sectors including
banking, retail and real estate. Most recently, it acquired a
chain of stores from supermarket operator Supervalu Inc.
It also has a number of investments in Europe and Japan.
Dow Jones reported on the completion of the CIP V
fundraising earlier on Wednesday.