In the face of the credit crunch and economic slowdown, investors are
looking for some of the best returns to come out of distressed asset funds, and turnaround specialists like Cerberus Capital Management LLC are expected to be at the
top of the heap. Unfortunately, Cerberus may have jumped in a little
too early as its latest fund is reportedly losing money after making
big bets on Chrysler LLC and GMAC LLC.
Continue reading below
Bloomberg is
reporting:
the IRR of Cerberus' newest fund fell 1% since starting in
November 2006...The $7.5 billion Cerberus Institutional Partners Series
Four lost $32 million on $3.3 billion in investments through March 31,
the New York-based company said in a presentation to investors last
month, a copy of which was obtained by Bloomberg News. The Standard
& Poor's 500 Index, a gauge of the largest U.S. stocks, fell 5.6
percent in the same period.
Cerberus' prior funds have been much better performers, returning as
much as 28% annually to limited partners. But in this case, after
investing $4 billion each in Chrysler and GMAC, the private equity firm
saw its portfolio companies hit hard by
high gas prices and the subprime-mortgage collapse.
- George White
See Bloomberg story
See Dealscape post on Chrylser
