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    9024   JP3417200007

SEIBU HOLDINGS INC.

(9024)
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Delayed Japan Exchange  -  02:00:00 2023-03-31 am EDT
1359.00 JPY   -0.15%
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Seibu : Exclusive: Cerberus seeks over $3 billion for private equity fund

04/02/2015 | 01:23pm EDT

(Reuters) - Cerberus Capital Management LP is seeking more than $3 billion for its latest flagship private equity fund to invest in distressed assets such as non-performing loans and ailing companies that need to be restructured, people familiar with the matter said.

This will be the first global private equity fundraising initiated by Cerberus since one of its private equity investments, Freedom Group Inc, was mired in controversy. Freedom Group is the maker of the Bushmaster rifle that was used by Adam Lanza when he killed 20 children and six adults at Sandy Hook Elementary School in Newtown, Connecticut, in December 2012. 

Cerberus has told investors it is targeting between $3 billion and $3.5 billion for the new fund, dubbed Cerberus Institutional Partners (CIP) VI, the people said. The fund's size will be capped at $4 billion, the people added, noting that the fundraising process had just started.

At the time of the Sandy Hook shootings, the fundraising process for the previous private equity fund, CIP V, had already begun and was only a few months away from completion, with most investors already having made their minds up on whether to invest based on Cerberus’ investment track record. That fundraising ended in April 2013, raising $2.61 billion, short of Cerberus' original $3.75 billion target.

To be sure, the New York-based firm manages other non-private equity funds and has raised more than $12 billion from investors in several funds in the last two years. These include direct lending and real estate funds.

The sources asked not to be identified because the fundraising process is confidential. Cerberus declined to comment.

Founded in 1992 and named after the mythical many-headed dog that guards the gates of the underworld, Cerberus is not known for its big leveraged buyouts, though in January it led a group of investors that combined their Albertsons supermarket chain with peer Safeway Inc in a $9.2 billion merger. Other notable investments include Japanese railway and property company Seibu Holdings Inc and U.S. yellow pages owner YP LLC.

The firm has strong returns to show investors in its last flagship fund. CIP V reported an annualized net internal rate of return of 29.3 percent as of the end of September, according to California Public Employees' Retirement System (CalPERS), the largest U.S. public pension fund investor.

CalPERS did not respond to a request for comment on whether it will invest in CIP VI.

   

CALSTRS INVESTMENT

At least one major public pension fund investor has publicly expressed concern over Freedom Group. Three days after the Sandy Hook massacre, California State Teachers' Retirement System (CalSTRS), the second-largest U.S. public pension fund, said it was reviewing its investment in Cerberus because of the Freedom Group holding. A day later, Cerberus said it would seek to sell the gun maker.

However, more than two years later, the private equity firm still owns the company. An auction for it led to offers that were deemed too low. Cerberus also tried to create a liquidity mechanism to let individual fund investors cash out of Freedom Group, yet that plan fell apart over disagreements about the company's valuation.

Cerberus has repeatedly communicated to its investors that it wants to sell Freedom Group and that investors themselves don’t want the company sold at a knockdown price, according to the sources.

Freedom Group's finances are deteriorating due to a recall of some of its rifles and the ensuing backlash from customers. It reported an operating loss of $15 million in the nine months to the end of September, versus a $177.2 million operating profit in the prior year, as sales dropped 29 percent. It had debt of $879 million and just $156.3 million in cash at the end of September.

In the latest chapter of this saga, California's state treasurer on Wednesday sent a stern letter to CalSTRS, asking that Cerberus sell Freedom Group. CalSTRS answered that "contractual obligations and legal constraints severely limit our options to exit this investment".

A CalSTRS spokesman declined to comment on whether the public pension fund will invest in CIP VI, but noted that CalSTRS had not invested in a Cerberus fund since 2008.

(Reporting by Greg Roumeliotis in New York; Editing by Martin Howell)

By Greg Roumeliotis


© Reuters 2015
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Financials
Sales 2023 483 B 3 633 M 3 633 M
Net income 2023 76 600 M 576 M 576 M
Net Debt 2023 761 B 5 721 M 5 721 M
P/E ratio 2023 5,37x
Yield 2023 0,74%
Capitalization 409 B 3 076 M 3 076 M
EV / Sales 2023 2,42x
EV / Sales 2024 2,65x
Nbr of Employees 21 367
Free-Float 62,8%
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Eiko Ohya Independent Outside Director
Takehiko Ogi Independent Outside Director
Keiji Goto Independent Outside Director
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