General Electric Company (NYSE/GE) has agreed to sell its private equity-lending business to the Canada Pension Plan Investment Board. This marks the company’s latest move to focus on its core industrial business.
The announcement came in on Tuesday, June 9: GE would sell its U.S. Sponsor Finance business and a $3.0-billion bank loan portfolio to the Canada Pension Plan Investment Board (CPPIB) for $12.0 billion. (Source: General Electric, June 9, 2015.)
Leaving Finance, Focusing on Industrial Business
The press release confirms that GE is selling most of GE Capital’s assets and focusing on its high-value industrial business. The announcement says that the company’s board has decided to dispose of these assets over the next 18 months as market conditions deemed favorable to do so.
GE’s Sponsor Finance business, the major part of the transaction, includes Antares Capital, a lending business to private equity-backed companies. After the transaction, CPPIB will keep the team and brand of Antares Capital. The press release says Antares Capital would operate as a standalone, independent business.
Keith Sherin, chairman and CEO of GE Capital, considers the announcement a “next step in GE’s transformation to a more focused industrial company,” and that “the sale of Sponsor Finance aligns with our strategy to pair a smaller GE Capital with GE’s long-term industrial growth.” (Ibid.)
Regulatory authorities have yet to approve the transaction. If everything goes as planned, the deal would close in the third quarter of 2015.
Over the years, GE has spun off a number of its non-industrial operations. In 2004, GE’s insurance business became a separate company, Genworth Financial, Inc. (NYSE/GNW). In 2006, GE sold its reinsurance business to Swiss Reinsurance Company. In 2010, it sold its security business to United Technologies Corporation (NYSE/UTX) for $1.82 billion. In July 2014, GE spun off Synchrony Financial (NYSE/SYF), its consumer credit card business.