Cerberus Capital Management LP will prohibit investors in two new hedge funds from withdrawing money for three years, the Financial Times said on Wednesday quoting executives from the firm.

The move tries to prevent outflows that followed Cerberus' loss making acquisitions of carmaker Chrysler and financial services company GMAC, the newspaper said.

The ban would apply to the funds to be raised for Cerberus Partners II and Cerberus International II, two investment vehicles specialized in distressed investments, the Financial Times said.

The funds will succeed two vehicles that were hurt by redemption requests as the financial crisis struck and Cerberus's high-profile investments soured, the newspaper said.

Cerberus could not be immediately reached for comments.

The Cerberus Partners LP and Cerberus International LP funds, which lost more than 20 percent last year, blocked clients from withdrawing funds in December and halted making new investments during the fourth quarter. The funds are little changed this year.

Recently, Cerberus asked clients of the two funds whether they wanted to stick with their investments, at a lower fee, or depart. Investors with more than 70 percent of fund assets not controlled by Cerberus partners elected to pull out.

Cerberus wrote down most if its Chrysler investment when the automaker headed into bankruptcy earlier this year, while its GMAC stake was slammed when the U.S. government bailed out the lender.

(Reporting by Juan Lagorio; editing by Andre Grenon)

Investment Chrysler Ban