BOSTON, June 7 (Reuters) – Cerberus Capital Management sees a benefit to private equity firms having smaller fund sizes and expects to reduce its fund size in the future, co-founder Stephen Feinberg said in a rare public appearance on Tuesday.
Large funds sometimes draw criticism from investors in private equity for being potentially less motivated to make money as the funds generate so much in fees.
“I do think there’s an issue here in funds that are too large and funds that have acquired too many assets under management,” Feinberg said at the SuperReturn private equity conference in Boston.
“The best way to do it is to have a large company infrastructure and have all the people that can really provide the breadth and depth … people who can look at a small or midmarket opportunity without worrying about the size … but still have a fund size that is reasonable,” said Feinberg, who gives interviews infrequently and has been photographed only a few times by news photographers.
Cerberus raised a $7.5 billion fund in 2007.
“Our goal is to significantly bring down our fund size, we’ll do that going forward,” Feinberg said. “It’s easier to be a little smaller.”
“We have always had significant size but have always been smaller than some of the really big guys. We are going to bring that down a lot for that basic point,” he said.
“If your goal is to maximize your returns as opposed to assets under management, I think you can be most effective with a big company infrastructure and a little bit smaller fund size,” Feinberg said.
(Reporting by Megan Davies, editing by Dave Zimmerman)