Cerberus vows to invest more than $1B in RP

US-based Cerberus Capital Management, L.P. said it would be investing more than the $1 billion it has already committed in the Philippines as it enters a possible partnership with Goldman & Sachs to look for attractive investments once the legal framework has been set for the disposition of problematic assets.

According to Cerberus senior adviser Dr. Karl D. Jackson, the only limiting factor to the company’s investments in the Philippines was the number of opportunities as well as the existence of the legal framework that would govern special purpose asset vehicles (SPAVs).

Jackson said Cerberus was still in negotiations with the government as well as several local banks for the acquisition and resale of problematic assets that it planned to take over and turn around.

Known as a leader in the international distressed debt, securities and reorganization market, Cerberus has invested over $20 billion in the market and has an available capital in excess of $7 billion that it plans to invest in Asia, specifically Japan, Korea and Thailand.

According to Jackson, the company was still committed to invest about $500 million in the housing sector and another $500 million on corporate restructuring, but this amount could easily go up and expand once it finalizes its planned partnership with Goldman & Sachs.

Goldman & Sachs’ investment, according to Jackson, would be over and above the amount already committed by Cerberus.

However, Jackson said Cerberus was awaiting passage of the SPAV law since this would have a direct impact on its planned investments in the country.

"You don’t know the law until it is passed so we are waiting for it to actually pass before going into any specifics," he said. "But we are still in discussion with the government and some banks."

Jackson said it is important for the Philippines to pass the SPAV law to enable companies such as Cerberus to enter the acquire problematic assets that could still be turned around. "The longer these assets are in limbo, the less they’re worth," he pointed out.

Jackson also warned that although there was ready capital that could be invested immediately, the Philippines was competing with other countries in the region which presented similar opportunities for acquisition, rehabilitation and resale.

At present, Jackson said Cerberus has spent roughly $2 billion in Japan, $500 million in Korea and several millions in Thailand. On the whole, he said the company planned to invest between $2 to $3 billion in Asia.

Cerberus plans to acquire and resell foreclosed assets of government housing institutions, particularly, the National Home Mortgage Finance Corp. (NHMFC), the National Housing Authority and the Pag-IBIG Fund.

At the same time, Cerberus also plans to go into a $500-million venture that would essentially involve establishing a business recovery vehicle for ailing companies.

Jackson said Cerberus was already in the process of initiating its due diligence work on NHMFC, NHA and Pag-IBIG with the view of acquiring their respective housing projects and repackaging them to be sold to other interested investors.