FOR six-and-a-half hours last week, Stephen Feinberg faced the toughest, most high-profile test of his glittering career.

Feinberg, the boss of Cerberus, a New York-based private-equity firm (with the emphasis on private), was fighting shy of the limelight and refusing to take calls from the press.

But as workers at Cerberus-owned Chrysler walked out on strike, it briefly looked like Feinberg and his firm would be making headlines for weeks to come.

So the fiercely private financier was the most relieved man in Manhattan when the strike was called off.

However, now Cerberus has been linked with Northern Rock, he may find himself quickly back in the public eye.

Over 15 years Feinberg has built Cerberus into a global pow-erhouse that owns companies across the world, generating revenues in excess of $60 billion (£29.4 billion).

In the recent bull market boom, other private-equity firms and their bosses – like Henry Kravis at KKR and Stephen Schwarzman at Blackstone – have, for better or worse, become famous names. It would be a fair bet that few Chrysler workers had heard of Cerberus before it swooped on the car firm in May. But this is Cerberus’s moment in the glare of the media spotlight.

Named after the three-headed hound that in Greek mythology guards the gates of Hades, Cerberus specialises in snapping up “distressed assets”.

With the credit-market turmoil still reverberating around the world, it’s a dog-eat-dog world – and cash-rich Cerberus is emerging at the head of the pack. The firm has long been making quiet inroads in Europe. Now it is reported to be slavering over Northern Rock, another high-profile and troubled asset.

Not that the company believes it is any more secretive than its rivals. According to John Snow, Cerberus chairman and former US Treasury secretary, it’s not a reputation Cerberus deserves.

“I chuckle when I hear it,” he told The Sunday Times. “I just got back last night from addressing 2,000 people at a private-equity conference in Las Vegas. The prior week I was in Turkey.”

He said the “secrecy” label arose from Feinberg’s desire to remain a private individual and concentrate on business.

Unlike Schwarzman, whose lavish 60th birthday party earlier this year was a gossip columnist’s dream, Feinberg does not flaunt his wealth. The son of a steel salesman, he describes himself as “blue-collar” and lives in a relatively modest Manhattan apartment. He prefers hunting and motorbikes to golf and polo. Even the company’s Park Avenue offices are low-key, their coffee-stained carpets and cheap prints a world away from the glamorous headquarters of KKR and Blackstone.

“He’s from upstate New York, he did history at Princeton, rather than maths or finance, and played sport – he was a jock,” said one associate.

Another said: “Steve is very down to earth. He still drives a pickup truck, likes his comforts but isn’t flashy. But he is fiercely ambitious for Cerberus.”

But as Cerberus grows it is being forced to think about its public image and tone down its tough reputation.

Last week’s deal between Chrysler and the unions showed a willingness to compromise. The company reversed plans to spin off its Mopar parts division and its transport operation, giving in on a sensitive union issue.

There will be more pain to come at Chrysler. The company has said its labour costs are equivalent to $75.86 an hour a worker, compared with $47.60 at Toyota.

But Cerberus is keen to emphasise that it sees its investments as long term, not strip and flip.

“We are not interested in a quick turnround. We have to be patient,” said Snow. “Ours is not a financial engineering model. We focus on the internal operations and a belief that the company we have bought has the potential to perform a lot better than it has been doing.”

In Britain, Cerberus recently bought Focus, the DIY group that had been held up as an example of the excesses of the private-equity industry.

Former owners Apax and Duke loaded the company with debt and took the proceeds out for themselves, leaving Focus with crippling interest payments which brought it close to collapse.

Focus changed hands in June for just £1 after Cerberus agreed to pay off £174m of the debt. The Focus debt peaked at £280m, but is now below £100m.

Cerberus employs a deep bench of former chief executives and big political names including Dan Quayle, the former US vice-president, and Jonathan Bloomer, the ex-Prudential chief executive, to advise on new acquisitions.

Snow said that this management expertise allowed the firm to see opportunities others miss. And he expects there will be plenty more in the months to come.

“We are seeing a lot of companies with distress on their balance sheet,” said Snow.

He said changing cycles in the credit market were still having a profound effect on companies across the world. There were still assets in the system whose price was at best “cloudy”. “Some are calling it a virus,” said Snow. “It’s not simply a US problem.”

The globalisation of financial markets means that companies across the world have investments tied up in financial products such as collateralised debt obligations (CDOs) – made up of portfolios of mortgages – whose true value is now under question.

“This presents a great opportunity for private-equity firms who know what they are doing – but you have got to know what you are doing,” he said.

One such opportunity is Northern Rock, the troubled British lender now being pursued by Virgin, Cerberus and a raft of other would-be buyers.

Snow said he would not comment on specific deals the company may or may not be interested in, “but obviously that is a very visible example of the broader problems in the market”, he said.

A problem that is giving Cerberus plenty to chew on.

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