GE to sell over half of GE Antares to Canada Pension: Reports
08 Jun 2015
General Electric Co is set to sign a $12-billion deal as today to sell over half its US private-equity lending arm to Canada Pension Plan Investment Board even as Ares Management LP eyes the rest of that business, Bloomberg reported citing sources.
Ares was pursuing a deal for the $8-billion Senior Secured Loan Program it co-managed with GE, according to the sources, who asked not to be identified.
The firm had lined up investors to help it acquire the Senior Secured loan, the report said.
GE was nearing an agreement to sell the other $10-billion in assets in the buyout lending unit to Canada Pension after Ares balked at including Senior Secured. Canada Pension would pay about $12 billion, primarily for the GE Antares division.
Commentators point out that a deal with Canada Pension would mark the first sale of a major business after the company announced plans on 10 April to divest around $200 billion of GE Capital assets. Chief executive officer Jeffrey Immelt is seeking to refocus Fairfield, Connecticut-based parent GE on industrial operations.
According to the The Wall Street Journal, the terms were still being negotiated for a takeover that would include over $10 billion of assets, but less than the unit's full book of $16 billion.
GE's retreat from lending and broader move to cut its exposure to its finance arm comes as US regulators curb seek to rein in aggressive lending by financial institutions that could pose systemic risk.
CPPIB had started operating a direct lending business as it looks to invest more in high-yielding assets that would help it fund its long-term liabilities. If it were to clinch the deal, it would become one of the largest lenders to private equity firms in North America.
The CPPIB manages the assets of the Canada Pension Plan, a social insurance programme that formed part of Canada's public retirement system.
