U.S. private equity firm Cerberus Capital Management said on Tuesday it will immediately begin selling its investment in gunmaker Freedom Group in light of last week's school shooting in Connecticut.
Pressure mounted on Cerberus as the California State Teachers' Retirement System (CalSTRS) said on Monday it was reviewing its investment with the private equity firm after the Connecticut school shooting.
CalSTRS had invested $751.4 million with Cerberus by the end of March 2012, according to its website.
Cerberus acquired firearms maker Bushmaster in 2006 and later merged it with other gun companies to create Freedom Group, which reported net sales of $677.3 million for the nine months ending September 2012, up from $564.6 million in the same period a year ago.
Bushmaster is the manufacturer of the AR 15 rifle used by the shooter in the Newtown, Connecticut killings that claimed 27 lives, including 20 school children.
The private equity firm said it will retain a financial adviser to sell its interests in Freedom Group, and will then return that capital to investors.
Founded in 1992 by Stephen Feinberg and William Richter, New York-based Cerberus has over $20 billion under management invested and shares its name with a mythical three-headed dog that in Greek mythology guards the entrance to the underworld.
(Reporting by Sakthi Prasad in Bangalore; Editing by Hans-Juergen Peters)