Cerberus targets $4bn for second supply chain-focused PE fund

Cerberus Capital Management has launched fundraising for its second supply chain-focused investment vehicle, targeting at least $4bn as the private equity firm expands its strategy of investing in businesses considered critical to the US economy and national security, according to a report by Bloomberg.

The report cites unnamed people familiar with the process as revealing that the New York-based manager has begun marketing the new fund to existing investors. If successful, the vehicle would represent a significant increase on the approximately $2.7bn raised for the firm’s inaugural Cerberus Supply Chain Fund and related separately managed accounts.

In parallel, Cerberus is also seeking to raise $250m for a successor to its venture capital strategy, which invests in early-stage businesses operating across artificial intelligence, healthcare, energy, natural resources and advanced computing. The firm’s previous venture fund raised approximately $225m.

Cerberus reportedly declined to comment on the fundraising. The firm previously said that co-founder Stephen Feinberg, who now serves as US Deputy Secretary of Defense, has divested his ownership interest in Cerberus and is no longer involved in its investment activities.

The fundraising effort comes at a challenging time for the private equity industry, with many managers facing longer fundraising cycles amid subdued distributions, slower exit activity and heightened investor caution. Concerns over portfolio valuations, geopolitical uncertainty and macroeconomic volatility have also weighed on capital raising across the sector.

Despite the more difficult fundraising environment, Cerberus continues to expand its investment platform around supply chain resilience and strategically important industries. The firm began developing the strategy in 2018 before raising capital for its first dedicated supply chain fund in 2021.

The strategy focuses on companies operating in sectors viewed as essential to US industrial capabilities and national security. Portfolio companies backed by the strategy include M1 Support Services, which provides maintenance services for military aircraft, and SubCom, a developer and installer of undersea communications cable infrastructure, both of which have secured US defence-related contracts.

Cerberus has also strengthened its leadership team to support the strategy. Last year, the firm appointed former US Ambassador Nathaniel Fick as Chief Strategy Officer to help identify investment opportunities across private equity and venture capital, including businesses linked to supply chains and critical infrastructure.