In an attempt to prevent the recurrence of the huge outflows following the purchases of Chrysler and GMAC, Cerberus, the US-based private equity investment group, is introducing a three-year lock-up period to bar investors to withdraw money in two new hedge funds – reported Financial Times.
It has been reported that the two multibillion-dollar funds, Cerberus Partners II and Cerberus International II, are successors to two vehicles that were hit $500 billion in redemptions over the past year, as Cerberus’s high-profile investments soured due to financial crisis.
Officials at Cerberus told the newspaper that the latest move reflects the company’s intension to avoid a similar kind of situation they encountered in December 2008, when it unilaterally stoped redemption requests from the two hedge funds to prevent a fire sale of its assets. Mark Neporent, chief operating officer, said that Cerberus’ portfolio, excluding the two funds, had recorded an 18% return so far this year and the two hedge funds were up between 1.5 and 3% this year, reported the newspaper.
