Like the mythical three-headed dog that guards the gates of hell, Cerberus Capital Management guards troubled companies from their impending doom. The New York-based private equity firm specializes in making investments in distressed companies with deep value. Known for its bold investment in the formerly-troubled auto manufacturer Chrysler, Cerberus Capital's portfolio now holds tamer investments in supermarkets (Albertsons and SUPER VALU), building materials (BlueLinx), resorts (Silverleaf Resorts), health care facilities ( Steward Health Care), and more. It also owns Ally Financial and gun maker Freedom Group. Founded in 1992, the firm and its affiliates now manage some $25 billion in capital.
The company targets four primary investment types: distressed securities and assets; control and non-control private equity; commercial mid-market lending; and real estate-related investments.
Cerberus Capital's proprietary operations affiliate, Cerberus Operations and Advisory Company, LLC (COAC) helps the firm by finding opportunities, using highly-informed due diligence practices, deploying acquisitions, and enhancing the performance of portfolio companies from a variety of industries.
The private equity giant invests in real estate through Cerberus Real Estate Capital Management, and engages in commercial lending through Cerberus Business Finance and Ableco Finance to private equity sponsors and corporations.
Cerberus has US offices in Chicago; Los Angeles; and New York City. It also has international offices in Europe (London; the Netherlands; Frankfurt, Germany; Madrid, Spain; and Northern Ireland); and Asia (Beijing, China; and Tokyo, Japan).
While known for acquiring distressed companies, Cerberus Capital has also been purchasing other distressed assets to find more great value investments in recent years. In 2014, for example, the company was named the leading investor in European non-performing loans (NPLs), as it invested €17.7 billion ($21.5 billion) which constituted nearly 22% of all closed commercial real estate and real estate-owned transactions in Europe for the year. One of these 2014 investments included the acquisition of a portfolio of loans owed by debtors in Northern Ireland from The National Assets Management Agency (NAMA) that are secured by assets in Ireland, Britain, and other locations in Europe. The deal strengthens Cerberus's foothold in Europe. In 2013, the firm acquired two German real estate property portfolios, plus a portfolio with nine shopping centers from Wells Fargo.
The private equity firm is also known for doubling -- even tripling -- down on its past investments. For example, after acquiring more than 650 supermarkets for $1.1 billion in 2006 from what was one of the nation's largest grocery operators, Albertsons, Cerberus and its partner Kimco Realty in 2013 went back for more. The two purchased an additional 877 stores, including some Albertsons stores, from SUPERVALU, its counterpart in the 2006 deal under whose ownership the remainder of the Albertsons stores struggled. The Cerberus-led group, which had considerably more success with the stores it bought, paid $100 million in equity and assumed $3.2 billion of debt to acquire more Albertsons stores and four other regional chains. It also took a minority stake in SUPERVALU. Delving deeper into the supermarket arena, Cerberus-controlled Albertsons has now agreed to acquire the Safeway grocery chain in a deal that would create a network of more than 2,400 stores.
The firm has also made strategic exits to reap rewards from its investments. Recent exits include the sale of transit bus maker North American Bus Industries to New Flyer for $80 million in June 2013.
One of its most notable moves was its 2007 purchase of 80% of Chrysler from Daimler (a stake that has since been eradicated). Cerberus was also the lead investor of a group that acquired 51% of GMAC (now Ally Financial), the financing arm of General Motors.