Cerberus Inks Deal to Sell Chrysler Financial: UPDATED

Christmas came early for Cerberus, the once mighty PE firm that has gotten nailed by some bad bets.

Today, Cerberus agreed to sell Chrysler Financial for $6.3 billion to Toronto Dominion Bank. The deal is short of the $7.4 billion Cerberus invested in Chrysler back in 2007. The deal will help burnish Cerberus’s series of auto-related investments, Dealbook says. Also, Cerberus is retaining about $1 billion in assets. (UPDATE: Cerberus invested $1.3 billion equity in Chrysler Financial as part of the $7.4 billion purchase price, a person says. Including the sale to TD and the roughly $1 billion in assets it will retain in Chrysler, Cerberus is expected to break even on its investment, the source says. “Everyone has characterized this as a big loss but it’s not the case,” the person says.  Also, Cerberus still owns about 14.9% in GMAC, which is now known as Ally Financial. The auto lender is expected to go public next year.)

News of the sale comes as Cerberus is expected to begin fundraising for a new fund next year, according to LBO Wire. Apax Partners will also be fundraising for a $14.5 billion fund in 2011, the Financial Times said. The fund would be one of the biggest pools since the credit crisis.

Apax is currently engaged in “premarketing” and taking the measure of investor interest from current and potential LPs, a source says. But Apax’s fundraising will be tough even though the PE firm has a good record and strong brand, the source says. At least half a dozen firms are expected to begin marketing for giant vehicles in the next 10 to 12 months, the source says.

One of those firms with big plans is KKR. The New York buyout shop expects to begin fundraising for its next North American fund in 2011. The firm’s last North American fund raised $17.6 billion in 2006 and about 70%, or $12.7 billion, has been invested. KKR’s next fund isn’t expected to reach $18 billion, an executive told peHUB.

There will be a lot of competition in the fundraising market in 2011. “The big question is how much mega fund volume investors are prepared to absorb,” the source says.

Blackstone, not to be outdone, is finally closing its massive sixth fund at $15 billion. BCP VI, which was said to be at $13.5 billion over the summer (down from the original target of $20 billion), will hit a final close of $15 billion.

The PE firm had a tough go hitting the $15 billion mark. Blackstone has been pursuing the fund since late 2008 and had to pursue investors worldwide. In fact, to entice interest, Blackstone gave better terms than others to those willing to write checks of about $500 million. Investors, in prior funds, had to cough up $1 billion for better terms.

The Blackstone fundraising is getting a lot of play today. But since fund totals have changed before with Blackstone, I’ll wait until the official announcement. With LPs saying they are less likely to commit to mega-LBO shops in 2011, these figures are worth re-visiting next year.