Cerberus Closes $2.3B Continuation Vehicle for Subsea Cable Giant

Cerberus Capital Management has closed a $2.3 billion single-asset continuation vehicle for SubCom, the subsea fiber optic cable manufacturer, extending its ownership of the infrastructure asset as global demand for undersea connectivity surges. The deal ranks among the largest GP-led secondary transactions announced in early 2025 and underscores how continuation vehicles have become a preferred exit mechanism for sponsors holding high-quality assets they're not ready to sell.

The transaction allows existing limited partners in Cerberus funds to either cash out their SubCom stakes or roll equity into the new vehicle alongside fresh capital from incoming investors. Goldman Sachs and Lazard served as placement agents on the deal, which closed in late January 2025 according to the announcement. Cerberus declined to disclose the names of participating investors or the breakdown between rollover equity and new commitments.

SubCom — formally Submarine Cable Company LLC — designs, manufactures, and deploys undersea fiber optic cable systems that carry the majority of global internet traffic. The New Jersey-based company has installed more than 700,000 kilometers of cable across every ocean, connecting continents for telecom carriers, tech giants, and governments. Cerberus acquired SubCom in 2018 from TE Connectivity for approximately $325 million, a valuation that now looks like a steal given the company's reported enterprise value north of $2 billion in this continuation vehicle.

The deal structure — a single-asset continuation vehicle rather than a traditional sale to a new buyer — reflects both the company's quality and the broader shift in how private equity exits are happening. GP-led secondaries accounted for roughly 60% of total secondaries deal volume in 2024, according to Jefferies data, with single-asset continuation vehicles representing the fastest-growing segment. For Cerberus, the move buys more time to capitalize on tailwinds in subsea infrastructure without triggering a full realization event.

Subsea fiber optic cables are having a moment. The infrastructure was once a sleepy backwater dominated by telecom consortiums and government contracts. Now it's a critical chokepoint in the global digital economy, with hyperscalers like Google, Meta, Microsoft, and Amazon pouring billions into private subsea cable networks to support cloud services, AI workloads, and content delivery.

According to TeleGeography, tech companies have funded or co-funded at least 30 subsea cable systems since 2016, a sharp acceleration from prior decades when carriers controlled nearly all new builds. Google alone is invested in 40+ cables globally. Meta has backed systems connecting North America to Europe and Southeast Asia. The shift reflects bandwidth demands that far outpace what carrier-owned cables can provide — and a willingness to own infrastructure rather than lease capacity.

SubCom sits at the center of this boom. The company doesn't own the cables — it builds them for others — but that makes it the arms dealer in an infrastructure land grab. Major projects in SubCom's recent pipeline include Google's Apricot cable linking Japan, Taiwan, Guam, the Philippines, and Indonesia, and Meta's 2Africa system ringing the African continent. Both represent multi-billion-dollar contracts with decade-long revenue visibility.

Revenue at SubCom has grown steadily since Cerberus's takeover, though the company remains private and doesn't disclose financials. Industry analysts estimate the global subsea cable market will exceed $30 billion annually by 2028, up from roughly $18 billion in 2023, driven by AI infrastructure, 5G backhaul, and emerging-market connectivity. SubCom competes primarily with Alcatel Submarine Networks (owned by Nokia) and NEC, with all three splitting the majority of new awards. For Cerberus, holding onto SubCom through a continuation vehicle rather than selling outright signals confidence that the best years are still ahead. Or it signals that bidders weren't willing to pay the price Cerberus wanted — a dynamic continuation vehicles elegantly solve by letting the GP set the valuation rather than testing it in a competitive sale process.

GP-led secondaries have exploded over the past five years, and continuation vehicles represent the most controversial subcategory. The structure allows a general partner to sell a portfolio company or fund stake to a new vehicle — often managed by the same GP — rather than exiting to a strategic buyer or another sponsor. Existing LPs can either take liquidity at the transaction price or roll their exposure forward. New investors buy into the new vehicle at a negotiated valuation.

For GPs, the appeal is obvious. Continuation vehicles let you hold winners longer, reset the clock on fund life, avoid a messy auction, and raise fresh capital without giving up control. For LPs, the math is murkier. Rolling investors get continued exposure to an asset they already own — potentially at a stepped-up basis. Selling LPs get liquidity, but at a price set by the GP and incoming investors rather than the open market.

Critics argue continuation vehicles can create conflicts of interest. The GP controls the timing, the valuation, and the process — all while earning fees on both the old fund and the new vehicle. If a GP struggles to find a buyer willing to pay their expected price, a continuation vehicle offers a workaround that may not reflect true market clearing value. The SEC has increased scrutiny of GP-led deals in recent years, issuing guidance that requires clearer disclosure of conflicts and fair valuation processes.

Despite the controversy, continuation vehicles are now table stakes. Institutional LPs have largely accepted them as a liquidity option in an environment where traditional M&A and IPO exits remain choppy. For high-quality assets — the kind that generate steady cash and have defensible market positions — continuation vehicles often make more sense than selling at a discount in a soft exit market.

Cerberus has leaned into continuation vehicles more aggressively than many peers. The firm has executed at least four single-asset CVs since 2021, including deals for Navistar supplier Tenneco and specialty finance platform OneMain Financial. The SubCom transaction is the largest to date and follows a pattern: Cerberus buys an asset cheap, improves operations and market positioning, then uses a continuation vehicle to capture embedded value without giving up control.

The $2.3 billion price tag on SubCom — roughly 7x what Cerberus paid in 2018 — reflects how infrastructure valuations have evolved. Investors no longer view subsea cables as niche telecom infrastructure. They're now considered digital infrastructure, a category that commands premium multiples because the assets underpin cloud computing, AI, and global connectivity.

Digital infrastructure fundraising hit record levels in 2024, with managers raising more than $50 billion for strategies focused on data centers, fiber networks, cell towers, and subsea cables. The asset class offers recession-resistant cash flows, long-term contracts, and exposure to secular growth trends — qualities that appeal to pension funds, insurance companies, and sovereign wealth funds increasingly allocating to private markets.

SubCom benefits from structural advantages that make it particularly attractive. The subsea cable manufacturing market is an oligopoly — only three companies have the technical capability and scale to deliver turnkey systems. Contracts are large, lumpy, and locked in years in advance, providing revenue visibility that's rare in manufacturing. And because subsea cables have 25-year lifespans, customers prioritize quality and reliability over price, limiting competitive pressure.

For incoming investors in the continuation vehicle, the bet is that hyperscaler spending on subsea infrastructure will continue accelerating. AI is the new catalyst. Training large language models requires moving massive datasets between continents. Running inference at scale requires low-latency connections between data centers. Both use cases drive demand for private, high-capacity subsea routes — exactly what SubCom builds.

But risks exist. Subsea cable projects are capital-intensive and require years to plan, permit, and deploy. Geopolitical tensions — particularly between the U.S. and China — are reshaping global cable routes, with some projects shelved or rerouted to avoid certain jurisdictions. And while hyperscalers have deep pockets, they're also ruthless negotiators who will play manufacturers against each other to drive down prices. SubCom's margin profile depends on maintaining pricing discipline in a market where only two competitors exist.

The SubCom continuation vehicle isn't happening in isolation. Single-asset secondaries for infrastructure assets have become a well-worn path, particularly for GPs who bought into sectors early and now face funds nearing the end of their lifecycle. Blackstone executed a $6 billion continuation vehicle for its stake in Emerson Electric's climate technologies business in 2023. EQT ran a $3 billion single-asset CV for its portfolio company Solarpack in 2024. Both deals followed similar logic: hold the asset longer, bring in new capital, give legacy LPs an exit.

What sets SubCom apart is the sector. Most large continuation vehicles have targeted traditional infrastructure — power plants, toll roads, water utilities. Digital infrastructure deals of this size remain relatively rare, which may explain why Cerberus needed Goldman and Lazard to place the equity. The investor base for subsea cables skews toward specialists who understand telecom, tech capex cycles, and geopolitical risk — a narrower pool than the generalist infrastructure funds that would bid on a renewable energy asset.

Cerberus hasn't disclosed which LPs participated in the continuation vehicle or how much of the $2.3 billion came from rollovers versus new commitments. That's standard — GP-led deals rarely publish investor details. But the structure typically creates a clear divide. Sophisticated LPs with strong liquidity positions and conviction in the asset tend to roll. LPs facing capital calls, portfolio concentration limits, or skepticism about the valuation tend to sell.

For LPs who rolled, the decision involves underwriting Cerberus's thesis that SubCom's growth story is just beginning. Those who sold crystallized a significant gain — Cerberus's original 2018 acquisition was modest, so even early-stage LPs are sitting on a multi-bagger — but gave up potential upside if demand for subsea cables continues outpacing supply.

The dynamic also depends on where LPs stood in the distribution waterfall. If Cerberus had already returned capital and was in carried interest territory, rolling LPs are effectively paying the GP a promote on future gains. If the fund hadn't yet cleared its hurdle, rolling might avoid triggering taxes on embedded gains. These mechanics matter more than the headline valuation in many cases.

One unanswered question: did any LPs push back on the process? GP-led deals require LP advisory committee approval in most cases, and some institutions have become more aggressive in negotiating terms — demanding independent valuations, co-investment rights, or fee reductions in exchange for rolling. Cerberus's reputation as a hard-nosed negotiator suggests the process wasn't friction-free, but nothing public has surfaced.

The incoming investors in the continuation vehicle represent a bet that the next three to five years will be even better for SubCom than the last seven. That requires believing several things simultaneously: that hyperscalers will keep building private cable networks, that AI will drive bandwidth growth beyond current forecasts, that SubCom can maintain market share against Alcatel and NEC, and that Cerberus won't try to flip the asset into another continuation vehicle when this fund hits its term limit.

Likely participants include infrastructure-focused funds, tech-specialist investors, and opportunistic credit funds looking for yield in a category adjacent to their core mandates. Some may have co-invested alongside Cerberus in prior deals and are simply deepening the relationship. Others are making a first bet on subsea infrastructure, using the continuation vehicle as an entry point without having to underwrite a full acquisition.

The continuation vehicle resets the clock for Cerberus, but it doesn't answer the ultimate question: how does this end? Single-asset vehicles typically have five- to seven-year terms, which means Cerberus is committing to hold SubCom into the early 2030s unless it executes another exit sooner. The most likely paths from here are an outright sale to a strategic acquirer or an IPO — assuming public markets regain their appetite for infrastructure offerings.

Strategic buyers could include the hyperscalers themselves. Google, Meta, and Microsoft all have the balance sheets to acquire SubCom outright if owning manufacturing capacity became strategically important. More likely buyers would be industrial conglomerates like Prysmian Group (the Italian cable giant) or infrastructure investors like Brookfield or Macquarie, both of whom have been acquisitive in digital infrastructure.

An IPO feels less probable. Public markets have shown limited enthusiasm for specialized industrials without clear growth narratives or diversified revenue streams. SubCom's project-based revenue model — where a single large contract can swing annual results — doesn't fit the steady, predictable profile that infrastructure investors want in a publicly traded company. But if AI infrastructure spending continues surging and public comps like Prysmian see multiple expansion, the calculus could shift.

For now, Cerberus has bought itself time. The continuation vehicle lets the firm harvest management fees on a larger asset base, keeps the carry clock running, and avoids the risk of selling into a weak exit environment. Whether that's good or bad for LPs depends entirely on what happens to subsea cable demand over the next half-decade — and whether Cerberus can resist the temptation to roll SubCom into yet another continuation vehicle when this one matures.

The SubCom deal is a data point in a larger trend: GP-led secondaries are no longer a niche tool for distressed funds or underperforming assets. They're now a standard part of the private equity playbook, used by top-tier firms to extend hold periods on their best companies. That shift has profound implications for how private markets function.

For one, it undermines the traditional private equity model of buying, improving, and selling within a defined timeframe. Continuation vehicles let GPs hold assets indefinitely, turning private equity into something closer to permanent capital. That's great for GPs — more fees, more carry, more control — but it changes the risk-return profile for LPs, who may find themselves locked into assets far longer than they expected.

Second, continuation vehicles obscure true performance. When a GP sells a company to a third party, the exit price is a market-validated data point. When a GP sells to itself via a continuation vehicle, the valuation is negotiated, not discovered. That makes it harder for LPs to benchmark performance, harder for regulators to assess fair dealing, and easier for GPs to smooth over periods when exit markets are unfavorable.

Third, the boom in GP-led deals is creating a secondary market within the secondary market. Specialized funds now exist solely to provide liquidity in continuation vehicles — buying out LPs who don't want to roll and selling to new investors who do. Firms like Lexington Partners, Coller Capital, and Ardian have raised billions to play this role. It's financialization layered on top of financialization, adding intermediaries and fees at every step.

Cerberus's press release is heavy on celebration, light on details. Several questions remain unanswered — some because the firm chose not to disclose, others because they can't be answered yet.

First: What's SubCom's actual valuation? The $2.3 billion figure is the total capital raised, not necessarily the enterprise value. If existing LPs rolled significant equity, the company's implied valuation could be higher. Conversely, if the vehicle includes leverage or preferred equity structures, the common equity valuation might be lower. Without seeing the fund documents, it's impossible to know.

Second: How did the pricing get determined? Best practice in GP-led deals involves hiring an independent valuation firm to assess fair market value, then using that as a floor for negotiations. But "best practice" isn't "required," and even independent appraisals involve judgment calls about growth rates, comps, and discount rates. If Cerberus used aggressive assumptions, incoming investors may be overpaying relative to what a strategic buyer would offer in a competitive process.

Third: What happens to employees and management? Continuation vehicles don't typically trigger management changes — the same team keeps running the company — but the new capital structure can affect incentive plans, equity grants, and long-term strategy. If SubCom's leadership team had been expecting an exit in the near term, the continuation vehicle delays their liquidity event. Whether that's a positive or negative depends on how much they believe in the growth story and how much equity they're rolling.

Fourth: Is this the last continuation vehicle, or just the latest? Some GPs have rolled the same asset through multiple continuation vehicles, effectively turning a 10-year fund into a 20-year permanent capital vehicle. Cerberus hasn't disclosed the term structure of the new fund, but if it's another seven-year vehicle, the firm could theoretically hold SubCom until 2032 or beyond — nearly 15 years after the original acquisition. At that point, the line between private equity and infrastructure permanent capital becomes meaningless.

The Cerberus-SubCom continuation vehicle is a bellwether. It tests whether investors still have appetite for large, single-asset secondaries in digital infrastructure. It tests whether subsea cables can command premium valuations in a market where AI hype is meeting macroeconomic caution. And it tests how far GP-led structures can stretch before LPs push back on the model.

For now, the deal got done — and at a size that signals real conviction from incoming investors. That suggests the subsea cable thesis is resonating, the continuation vehicle structure is working, and Cerberus has room to keep playing the long game. Whether that proves out depends on forces beyond any single firm's control: the pace of AI adoption, the trajectory of hyperscaler capex, the durability of geopolitical tensions, and the willingness of LPs to keep accepting extended hold periods in exchange for exposure to high-quality assets.

What's certain is that GP-led secondaries aren't going away. They've become too useful for sponsors, too accepted by LPs, and too profitable for intermediaries. The question isn't whether continuation vehicles will keep happening — it's whether they'll keep getting bigger, whether oversight will tighten, and whether the market will eventually demand more transparency about who's winning and who's just along for the ride.

In SubCom's case, the answer will play out underwater — in the cables being laid across ocean floors, carrying the data that powers the internet, and generating the revenue that will determine whether Cerberus's $2.3 billion bet was prescient or just well-timed financial engineering.