Blackstone and KKR to be early bidders for GE Capital Sponsor Finance: Report
08 May 2015
Blackstone and Kohlberg Kravis Roberts & Co LLP are likely to be early bidders to General Electric's GE Capital Sponsor Finance Group, which includes GE Antares, The Financial Times reported.
According to Mergers & Acquisitions, which quoted a source inside GE, Apollo Management, Ares Management, Mitsubishi UFJ Financial Group Inc and Sun Trust Banks are also reportedly bidding for the unit. The source said the unit would sell first and quickly.
GE Capital Sponsor Finance, which additionally includes TMT, GE Equity and the Bank Loan Group -- has a strong presence in middle-market lending, a space dominated by GE Capital, which makes an estimated 25 per cent of all loans made to companies with revenues between $25 million and $500 million.
Like many of today's middle-market firms, GE Capital Sponsor Finance emerged from Heller Financial, the Chicago-based finance firm that rose to prominence in the '80s and '90s with its exclusive focus on the middle market.
Antares today boasts about $14 billion in assets under management and is considered the jewel in the crown of GE Capital Sponsor Finance.
GE announced the sale of GE Capital, which consists of six units as on 10 April. The units are - GE Capital Corporate Finance, GE Capital Sponsor Finance, GE Capital Franchise Finance, GE Capital Healthcare Finance, GE Capital Equipment Finance and GE Capital Commercial Distribution Finance.
Last month, Wells Fargo & Co and SunTrust Banks, Inc had also held talks with GE regarding the lending unit purchase.
Also last month, Blackstone signed a deal with GE to buy its real estate segment worth $26 billion, in partnership with Wells Fargo (See: GE agrees to sell part of real estate for $23 bn; announces $50-bn share buyback).
According to commentators, as a result, Blackstone might not have further funds available to buy GE's lending segment, but it might partner with another company to acquire the business.
GE's commercial lending segment has assets worth $74 billion and currently has 260,000 customers.
According to Bidness Etc in the light of the financials above, Wells Fargo seemed to have the required financial strength to acquire GE's lending unit at a fair price.
GE is going through a transition involving cutting capital revenue contribution, which is currently at 42 per cent. GE CEO Jeff Immelt announced last month that he planned to bring the figure down to 25 per cent by fiscal year 2018.
