NEW YORK (TheStreet) -- Bidders lining up for General Electric's (GE - Get Report) $115 billion asset management unit -- which analysts say will likely include private equity titans such as Blackstone and Apollo -- may drive the sale price to a premium.
GE is selling the business, which traces its roots to the Fairfield, Conn.-based company's first pension plan in the 1920s, as it exits the majority of its finance businesses to focus on its industrial roots. Not only does selling it mesh well with CEO Jeffrey Immelt's current strategy, "asset management businesses have been going at a premium and there's huge demand," Ivan Feinseth, an analyst with Tigress Financial Partners, said in an interview.
Of possible buyers, "BlackRock (BLK - Get Report) , Blackstone (BX - Get Report) would be the two that come to mind, and even Apollo (APO - Get Report) ," Feinseth said. "Those are the most likely bidders."
GE Asset Management had roughly $115 billion assets under management as of June 30, including those tied to GE's U.S. pension plan and a host of institutional clients. The company announced earlier this year that it would spin off most of its GE Capital lending arm, a separate business that once accounted for 42% of income.
At the same time, Immelt has invested heavily in manufacturing businesses with deals like the 12.45 billion-euro purchase of French turbine-maker Alstom's power business, valued at about $14 billion at current exchange rates.
"GE had so many pension assets and they can leverage that" with the move, Nick Heymann, an analyst with William Blair, said in a phone interview. "This is kind of a dial-down of that activity, and they will ultimately sell to another money manager, which is in line with shifting out of the vast majority of the financial services business."
Because the fund is heavily tied to pensions, a firm with more experience in managing retirement assets, such as Fidelity, may be a more likely bidder than the larger, institutional money managers such as BlackRock, Heymann said.
Apollo Global Management declined to comment. General Electric, BlackRock and Blackstone did not immediately respond to requests for comment.
"Over time, there has been significant interest from premier investment firms in acquiring GE Asset Management, reflecting its reputation and attractiveness to others," Immelt said in a statement.
GE has a history of exiting large businesses when demand is hot, as it did with the $18.1 billion sale of its remaining stake in NBC Universal, along with offices in the 30 Rockefeller Center headquarters, to Comcast (CMCSA - Get Report) in 2013, Feinseth said.
An independent fiduciary will be appointed to review the sale of GE's money management unit and approve the manager who will oversee GE's pension plan, the company said. Proceeds from the sale will be invested into GE's pension trust.
The GE Pension Plan was approximately 104% funded at the beginning of this year, based on measurements in accordance with the Employee Retirement Income Security Act, GE said.
The reinvestment in the pension trust will help promote the image of continuity within the company's retirement plans, Heymann said.
"They're trying to reassure their employees that there will be no change to contribution or the profit-sharing plan," he said.