Cerberus Capital Management has hired former Goldman Sachs distressed executive Allen Ukritnukun to head up the firm’s European distressed trading and investing operations.
Ukritnukun will lead a team in London focused on European and Asian distressed investing, including financials, sovereign debt and structured credit, the firm said in a statement. Ukritnukun also will have responsibilities across the firm’s US distressed debt business.
While Cerberus has operated in Europe for at least 15 years, the firm has been growing the platform in the region, according to the statement. “Since Cerberus’ founding, the firm’s hallmark has been its ability to invest successfully in complex markets,” Mark Neporent, the firm’s chief operating officer, said in the statement. “We are confident that Allen’s vast experience in the European distressed markets will be a major asset to our team in the months and years ahead.”
Cerberus is in the market targeting $3.75 billion for its fifth fund and is attempting to convince investors to trust it with their capital despite the high profile bankruptcy of US automaker Chrysler and the bailout of GMAC Financial. The firm has broken even on its Chrysler investment, sources told Private Equity International.
Distressed debt has played a significant role in helping Cerberus turn around its $7.5 billion fourth fund, from which the firm made its Chrysler and GMAC investments. During the financial crisis of 2008 and 2009, the firm was able to invest in residential mortgage debt at steep discounts. Those investments paid off, giving the firm gains of $952 million in 2010 and at least $850 million in 2011.
Cerberus is one of several firms that have bolstered operations in Europe to take advantage of the distressed opportunity in the region. Financial institutions, corporations and sovereign institutions have been selling assets cheaply to contend with the ongoing debt crisis in the region.
Kohlberg Kravis Roberts, Avenue Capital and Oaktree Capital Management have been operating in the region capitalising on distressed opportunities.
“There are not enough buyers to take in all those assets,” Nat Zilkha, co-head of KKR’s special situations group, told Private Equity International in a prior interview. “We’re deploying capital at attractive rates of return.”