Cerberus Forms Company to Bolster Its Private Equity Tech Bets

(Bloomberg) -- Cerberus Capital Management is taking its first major steps into the technology sector.

The alternative asset manager is creating a new subsidiary to help the companies it owns harness the latest technologies in areas including cybersecurity, e-commerce, blockchain and machine learning, according to New York-based Cerberus. The firm will also look for more opportunities to invest in tech and analytics businesses.

Cerberus, which has more than $35 billion in assets, said that it hired Len Laufer, who most recently led an emerging technology group at JPMorgan Chase & Co., as chief executive of the business.

Cerberus is jumping into tech as Wall Street grapples with embracing a range of developments from AI to data management. Hedge funds and asset managers have moved headlong into quant investing -- hiring hundreds of programmers and Ph.Ds -- to try to unleash the power of data to boost returns. Private equity firms including Blackstone Group LP are expanding deeper into the tech sector to bolster growth.

“We see tremendous opportunities to utilize technology to drive revenue generation, improve efficiency, and manage risk,” Cerberus President Matt Zames, who will be chairman of the new company, said in an emailed statement.

Cerberus, founded in 1992 by Stephen Feinberg and William Richter, has emerged as one of the world’s largest private equity firms after starting out as a buyer of distressed bonds. Among its high-profile deals were purchases in 2006 and 2007 of majority stakes in Chrysler and GMAC, the former financing arm of General Motors. Its current holdings include Avon Products Inc., Staples Solutions and Albertsons Companies.

Earlier this year, the firm underwent several changes in leadership when Zames, the former JPMorgan executive who had been seen as a candidate for the top job at Deutsche Bank AG, was named president. Frank Bruno was also promoted from president to co-CEO alongside Feinberg.

Zames and Laufer worked together at JPMorgan. Before that, Laufer co-founded Argus Information and Advisory Services, a firm that provides risk, pricing, and behavioral data to the payments industry. Argus was sold to Verisk Analytics in 2012.

“Our approach is to work collaboratively with companies to drive transformation and modernization,” Laufer said in an email.

To contact the reporter on this story: Heather Perlberg in Washington at hperlberg@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alan Mirabella

©2018 Bloomberg L.P.