GE has reached an agreement to sell its US Sponsor Finance business and a $3 billion loan portfolio to Canada Pension Plan Investment Board (CPPIB) in a transaction valued at approximately $12 billion.
The Sponsor Finance business is principally made up of Antares Capital – GE Capital’s lending business to private equity-backed middle market companies. Upon closing, CPPIB will retain the team and the brand of Antares Capital. It will operate as a stand-alone, independent business, led by its managing partners David Brackett and John Martin, who have led Antares since its formation. Stuart Aronson, CEO of GE Capital Sponsor Finance will remain with GE Capital. The sale is part of a strategy by GE to focus on its industrial businesses and the company is in the process of selling most GE Capital assets.
“We are excited to announce this agreement to sell Sponsor Finance to CPPIB,” said Keith Sherin, GE Capital chairman and CEO. “This represents an important milestone as we continue to execute on our strategy to sell most of the assets of GE Capital.”
According to a statement from the company, GE Capital plans to continue to operate both the Senior Secured Loan Program (SSLP), a joint venture between GE Capital and Ares Capital, and the Middle Market Growth Program (MMGP), a joint venture between GE Capital and Lone Star Funds, for a period of time prior to closing to provide Ares and CPPIB the opportunity to work together on a go-forward basis. If a mutual agreement is not reached, GE Capital intends to retain the SSLP and the MMGP in order to wind down the programs in an orderly fashion.
“This announcement is the next step in GE’s transformation to a more focused industrial company. The sale of Sponsor Finance aligns with our strategy to pair a smaller GE Capital with GE’s long-term industrial growth,” said Mr. Sherin.
The transaction is expected to close in the third quarter of 2015. J.P. Morgan Securities and Citigroup Global Markets provided financial advice to GE and Sidley Austin provided legal advice.
© 2015 PEPD • Private Equity’s Leading News Magazine • 6-9-15