UPDATE 2-Cerberus raises $2.61 billion private equity fund -sources

Wed May 1, 2013 11:19pm EDT
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* Cerberus has raised over $11 bln over the last two years

* First completed PE fundraising since plans for Freedom sale

* Cerberus partners may bid for gunmaker Freedom

By Greg Roumeliotis

NEW YORK, May 1 (Reuters) - Cerberus Capital Management LP has completed fundraising for its latest flagship private equity fund, raising $2.61 billion to invest in distressed assets, two sources said, bringing the capital Cerberus has raised from investors in the last two years to over $11 billion.

Cerberus Institutional Partners V (CIP V) is also the first Cerberus private equity fund to complete fundraising after the firm said in December it would sell Freedom Group Inc, the maker of the Bushmaster rifle that was used in the shootings at Sandy Hook Elementary School in Newtown, Connecticut.

Cerberus started marketing CIP V in 2011 with a $3.75 billion fundraising target, and later moderated its expectations to between $3 billion and $3.5 billion.

There is no evidence that the Freedom Group controversy weighed on the CIP V fundraising, one of the people familiar with the matter said. Both people spoke on condition of anonymity because the details of the fundraising are confidential. A Cerberus spokesman declined to comment.

Following the Newtown massacre, Cerberus came under public pressure to sell Freedom Group and moved quickly to announce it would divest it. The firm's chief executive and co-founder Stephen Feinberg, along with other Cerberus partners, may make a bid for the gun maker to ensure the sale does not occur at an unfairly low price for its investors, sources told Reuters last month.   Continued...