Cerberus Capital Management is betting big on bad loans.

The New York-based firm, which holds equity stakes in Avon Products Inc. and Deutsche Bank AG, has raised $5.1 billion (around € 4.5 billion) to buy nonperforming loans, or NPLs, to capitalize on a growing supply of such deals in Europe and other markets.

Cerberus Global NPL Fund, L.P. (“Global NPL Fund”) initially targeted $3.5 billion in commitments and closed approximately $4.1 billion of commitments from existing and new limited partners. In addition to the Global NPL Fund, Cerberus raised over $1.0 billion of commitments in separately managed accounts (“SMAs”) for its global NPL strategy.

The global NPL opportunity represents a multi-trillion-dollar market with attractive investment opportunities that few managers are equipped to pursue. In addition to significant opportunities in Europe, Cerberus believes compelling long-term opportunities to invest in NPL portfolios exist in other parts of the world, including China, India, and Brazil.

With approximately $5.1 billion in total commitments, Cerberus expects to continue its track record as one of the largest and most experienced NPL investors in the world. Cerberus’ NPL platform is supported by its industry-leading investment team with 46 investment professionals that work in concert with Cerberus’ proprietary servicing platforms, including Cerberus European Servicing, along with Cerberus’ third-party servicing partners in local jurisdictions.

«We greatly appreciate the support from our existing limited partners, as well as our new investors, who recognize our proven track record investing in NPLs across geographies and business cycles,» commented Seth Plattus, Chairman of the Cerberus Capital Formation Committee.

Lee Millstein, President of Cerberus Global Investments and Global Head of Real Estate for Cerberus, added, «We have built an industry-leading NPL platform with the expertise, resources, and scale to partner with leading banks and provide best-in-class servicing. We are uniquely positioned to benefit from the strong NPL opportunities around the world and we look forward to continuing to be a trusted, strategic partner to financial institutions.»

While the firm has managed single-strategy NPL funds for SMAs and invested in NPL portfolios from its flagship multi-strategy funds, the Global NPL Fund is Cerberus’ first dedicated NPL fund. Over the past two decades, Cerberus has executed more than 215 NPL transactions across 17 countries globally, with a total transaction size in excess of $65 billion. Since 2013, Cerberus has been the leading purchaser of European NPL portfolios, investing approximately $15 billion in equity.

Original Story: The Wall Street Journal |Will Louch
Photo: Cerberus website
Edition:Prime Yield