Report: Cerberus to target distressed financial institutions

The private equity firm’s chairman, John Snow, has said Cerberus will raise a fund dedicated to undervalued assets under distress due to current market dislocation. He also said Cerberus funds 'are open' to Chinese sovereign fund investment.

Cerberus Capital Management will reportedly join many of its peers in raising a dedicated distressed investment fund to target assets including undervalued financial institutions.

“The valuations of a lot of financial institutions have them oversold, undervalued,” firm chairman John Snow told Reuters during a conference in Beijing. “For investors who don't have short-term liquidity requirements, who can wait a while, there will be significant returns.”

The firm already has significant experience with investment in troubled companies, such as US automaker Chrysler.

John Snow

Snow, a former US Treasury Secretary, declined to say how much capital Cerberus intends to raise for the fund, but said it would garner global commitments and mainly target international investments that have been carefully evaluated.

Reuters noted earlier reports that the firm was looking to purchase certain loan and property portfolios in the wake of credit market woes.

“Cerberus has highly trained, experienced people in that world, and we haven't rushed in yet,” he said. “The impossible question is when do you get to the bottom of this. Nobody knows that.”

He also said Cerberus believes it can play an important role in helping Chinese sovereign funds to deploy capital abroad, but declined to say whether he’d met with officials regarding fund investments.

“Clearly, those large pools of wealth are looking for good returns,” he said. “Our funds are open, and we are prepared to talk to people who want to invest with us. We are not exclusive.”