NEW YORK (The Deal) -- General Electric ( GE) said Tuesday it would sell its private equity lending portfolio to Canada Pension Plan Investment Board, or CPPIB, a major step in the conglomerate's effort to shed finance and return to its industrial roots.
The assets to be sold, including GE's Antares Capital, is a financier of mostly middle market private equity transactions. The deal also includes a $3 billion bank loan portfolio. Post-deal Antares Capital will operate as a stand-alone business based in Chicago and led by current managing partners David Brackett and John Martin, while GE Capital Sponsor Finance CEO Stuart Aronson will remain at GE Capital.
Antares over the last five years has provided more than $120 billion in financing.
The deal, which would be CPPIB's largest to date, would give the firm significant exposure to the U.S. middle market lending sector. The fund said that it sees opportunities to grow the business by increasing funding for new deal origination.
"Antares represents a rare opportunity to invest in the leading lender in this segment of the market and involving companies owned by private equity sponsors," Mark Jenkins, senior managing director and head of private investments at CPPIB, said in a statement. "With this single transaction, we immediately acquire turn-key scale and a long-term partnership with the best, most experienced management team in the market."
"It secures a market-leading business that is exceptionally well positioned to deliver value-building investment flows," Canadian Pension CEO Mark Wiseman said. "In doing so, we are advancing the prudent diversification of our investment portfolio, strengthening the fund even further."
Fairfield, Conn.-based GE in April said it would seek to sell most of the assets in its sprawling GE Capital unit, keeping only the financing businesses that relate directly to its industrials operations. With this sale, GE Capital said it has now finalized sales of about $55 billion of assets and the company said it is on track to execute sales of $100 billion in assets by year-end.
The company has spent the better part of the last decade refocusing toward the industrials, in 2004 spinning off Genworth Financial as an independent and selling control of NBC Universal to Comcast in 2011. The company spun off its Synchrony Financial last year before embarking on this current plan to wind down much of the rest of GE Capital.
GE Capital Chairman and CEO Keith Sherin in a statement said the Antares deal "represents an important milestone as we continue to execute on our strategy to sell most of the assets of GE Capital," calling the transaction "the next step in GE's transformation to a more focused industrial company."
General Electric said it would continue to run its senior secured loan program, a joint venture between GE Capital and affiliates of Ares Capital, as well as its Middle Market Growth Program, a joint venture with Lone Star Funds, for an unspecified period of time to provide CPPIB the chance to work with both parties.
GE also said Tuesday it is exploring several options for the sale of its majority stake in Poland's Bank BPH SA, including a full carve-out of BPH's foreign currency denominated mortgage portfolio. The move comes amid an expected boom for foreign currency denominated mortgages following January's decision by the Swiss Central Bank to remove the Swiss franc peg against the euro.
GE owns 87.23% of BPH, which is based in Gdansk and listed in Warsaw. GE bought BPH together with a mutual fund for €625.5 million ($705.4 million) in 2007 from Italy's Unicredit SpA and merged with GE Money Bank two years later. BPH had about 31.6 billion zlotys ($8.5 billion) in assets in its fiscal year 2014, according to information on its Web site.
Last month, BPH posted a net profit of 12.4 million zlotys in the first quarter, down from 28 million zlotys a year ago, while pre-tax profit came to 22.3 million zlotys, down 43.6% from the same period last year.