Cerberus Capital Management is making sure it never again suffers a redemption crisis like the one in which it is currently enmeshed. The New York-based alternative investments firm will impose a three-year lockup on two new hedge funds it aims to launch later this year.
Cerberus hopes to raise several billion dollars for its Cerberus Partners II and Cerberus International II, successors to its current hard-luck funds. Investors in the existing funds are pulling more than 70% of their assets after they lost nearly 25% last year on bad bets, including Cerberus’ ill-fated takeover of Chrysler.
The long-term lockups are Cerberus’ way to make sure that never happens again, according to the Financial Times.
But many of the firm’s redeeming investors balked at a lockup, demanding quarterly liquidity to join the new funds, Cerberus said last month. Mark Neporent, the firm’s chief operating officer, said investors holding about 60% of the fund’s total assets were moving their money into a liquidation vehicle that will return capital over the next three years. The rest are moving to the new fund, lockups and all.