GE Reaches $55 Billion in Loan Portfolio Sales With Canada Pension Deal

NEW YORK (TheStreet) -- As part of General Electric (GE) CEO Jeffrey Immelt's plan to wind down its financing business, the company has agreed to sell its U.S. sponsored lending platform and a $3 billion loan portfolio to Canada Pension Plan Investment Board for $12 billion.

The deal is expected to close in the third quarter, pending regulatory approval, the Fairfield, Conn.-based company said in a statement. So far, GE Capital has announced sales of about $55 billion of its portfolio and is on track to execute sales of $100 billion by the end of 2015, the company said today.

Selling off almost all of its finance business will help GE shed its label as a systemically important financial institution, a government designation that imposes stricter regulatory requirements in an attempt to avoid a repeat of the financial crisis, and refocus on its industrial roots. Immelt plans to draw 90 percent of income from manufacturing businesses by 2018, up from from 58% last year.

"This represents an important milestone as we continue to execute on our strategy to sell most of the assets of GE Capital," Keith Sherin, the head of the unit, said in the statement. It's a testament, he said, to the company's "ability to execute high-value transactions quickly."

Antares Capital, the principal piece of the sponsored finance business, will retain much of its team after the sale, according to the statement. Antares, which lends to middle-market businesses backed by private-equity companies, has provided $123 billion in credit in the past five years. The loans typically come in the form of senior secured debt, which rank above bonds in a company's capital structure.

"This announcement is the next step in GE's transformation to a more focused industrial company," Sherin said.

GE expects sell off the bulk of its capital arm over the next 18 months, leaving only the components that directly support the company's industrial businesses.

GE Capital generated more than 28% of the parent company's operating earnings last year, compared with about 41% in 2007, before the crisis wreaked disproportionate havoc on the Fairfield, Conn.-based company compared with its industrial peers. GE climbed 0.2% to $27.30 in morning trading in New York.

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