Will Cerberus’ mixed performance hurt its fundraising ambitions?

January 15, 2020

Last year, we looked at Cerberus Capital Management’s investment in grocery retailer Albertsons-Safeway, one of the largest private equity-owned companies in the United States by employees.

We recently took a closer look at the investment performance of Cerberus’ recent funds:

Report: Will Cerberus’ mixed performance hurt its fundraising ambitions?

Key points:

– Private equity firm Cerberus Capital Management has had mixed performance over the last decade. Cerberus Institutional Partners VI (CIP VI), Cerberus’ most recent flagship private equity/distressed debt platform, has had notably poor performance generating a 4.5% IRR as of March 2019.

– Cerberus investors seem to have taken note. The Pennsylvania Public School Employees Retirement System, Cerberus’ second largest known investor, reported that it had chosen to not invest in Cerberus’ newest fund.

– Cerberus is currently fundraising for a dedicated private equity fund, a direct lending fund, and a real estate debt fund.

– Cerberus Institutional Partners VI’s investments in the German banking sector may have contributed to poor performance. Specifically, Cerberus’ investments in in Deutsche Bank and Commerzbank have lost around half their value since Cerberus became a major shareholder in both banks in 2017.

– In December 2019, the US Department of Justice intervened in a federal False Claims Act whistleblower complaint against Cerberus portfolio company Navistar Defense alleging the company overcharged the US Marine Corps for armored vehicle parts.

Full report available here.

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