General Electric Co. has agreed to sell its private-equity-lending unit to Canada’s largest pension fund in a deal valued at about US$12 billion, The Wall Street Journal reported.
The move is a major step in the industrial giant’s retreat from banking.
GE said it would sell its “sponsor finance” business, which includes Antares Capital, and a US$3 billion bank loan portfolio to Canada Pension Plan Investment Board.
Antares Capital will keep its name and operate as a stand-alone business.
The deal is a step forward in GE’s effort to sell off the bulk of its US $500 billion GE Capital unit.
GE is largely getting out of the banking business after years in which investors urged the company to get back to its industrial roots as market conditions and federal regulations weighed on the finance unit’s returns.
With the acquisition, CPPIB will become a major lender to buyout firms that are investing in midsize US businesses.
As a pension fund, CPPIB is focused on investments that generate steady returns over the long term to help fund its pension liabilities.
The GE loan portfolio provides it with a bigger source of recurring interest-rate income from the outstanding loans and a larger platform from which to originate new loans.
– Contact us at [email protected]