Cerberus SPV Makes High Return

Chidem Kurdas

Long-suffering clients of Stephen Feinberg’s Cerberus Capital Management received good news this fall—an early holiday gift, you might say.  It concerned the special-purpose vehicle set up to contain assets that became toxic and just about unsellable in 2008-2009. 

Last year, the firm’s clients withdrew several billion dollars from its hedge funds.   But Cerberus put limits on redemptions and a lot of capital was frozen in the form of investments that were moved into an SPV.

Cerberus gave customers incentives to make the SPV attractive, such as lower fees. But there is no exit from the vehicle except as money is freed when the assets are sold.  Some elected to stay invested as others fled.  Regular Cerberus funds and share classes come with a variety of redemption conditions.

The SPV is still closed to redemption, but the assets in it gained as much as 50% in a matter of a few months, according to an investor. Can it be that patience will be rewarded and a toxic-sounding SPV will turn out well?  That possibility should make the waiting easier.



2 Responses to “Cerberus SPV Makes High Return”

  1. Closed Centaurus Fund’s Upside « HedgeFundSmarts Says:

    […] similar happened to a special-purpose vehicle Cerberus Capital set up in the crisis to hold illiquid assets seen as toxic at the time. It  recovered […]

  2. Cerberus SPV Attracted Customers « HedgeFundSmarts Says:

    […] SPV started making money in 2010 and continues to bring high returns.  Anyone who bought it at a discount made a great […]

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