GE (NYSE:GE) announced today that it has reached an agreement to sell
its U.S. Sponsor Finance business and a $3 billion bank loan portfolio
to Canada Pension Plan Investment Board (CPPIB) in a transaction valued
at approximately $12 billion.
“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. The value we will achieve through this
transaction is a testament to the depth of talent and expertise of the
Sponsor team and our ability to execute high-value transactions
quickly,” added Sherin.
As previously announced, GE is embarking on a strategy to focus on its
high-value industrial businesses and is selling most GE Capital assets.
GE and its Board of Directors have determined that market conditions are
favorable to pursue disposition of these assets over the next 18 months.
GE will retain the financing “verticals” that relate to GE’s industrial
businesses.
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.
GE Capital plans to continue to operate the Senior Secured Loan Program
(SSLP), a joint venture between affiliates of GE Capital and affiliates
of Ares Capital, 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, it is GE Capital’s intention to retain
the SSLP in the future so that it can execute an orderly wind down of
this program ($7.6 billion GE Capital investment, $6.1 billion of which
is attributable to Sponsor Finance). Similarly, GE Capital plans to
operate the Middle Market Growth Program (MMGP), a joint venture between
affiliates of GE Capital and affiliates of Lone Star Funds, for a period
of time prior to closing to provide Lone Star and CPPIB the opportunity
to work together on a go-forward basis. If a mutual agreement is not
reached, it is GE Capital’s intention to retain the MMGP in the future
so that it can execute an orderly wind down of this program ($0.6
billion GE Capital investment).
With this transaction of approximately $11 billion of ending net
investment (ENI), GE Capital has announced sales of about $55 billion
and is on track to execute sales of $100 billion by the end of 2015. The
transaction, when completed, will contribute approximately $2.5 billion
of capital to the overall target of approximately $35 billion of
dividends expected to GE under this plan (subject to regulatory
approval).
Mr. Sherin concluded, “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.”
The transaction is subject to customary regulatory and other approvals.
The transaction is expected to close in the third quarter of 2015.
J.P. Morgan Securities LLC and Citigroup Global Markets Inc. provided
financial advice to GE and Sidley Austin LLP provided legal advice.
About GE
GE (NYSE:GE) imagines things others don’t, builds things others can’t
and delivers outcomes that make the world work better. GE brings
together the physical and digital worlds in ways no other company can.
In its labs and factories and on the ground with customers, GE is
inventing the next industrial era to move, power, build and cure the
world. www.ge.com.
GE’s Investor Relations website at www.ge.com/investor
and our corporate blog at www.gereports.com,
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@GE_Reports, contain a significant amount of information about GE,
including financial and other information for investors. GE encourages
investors to visit these websites from time to time, as information is
updated and new information is posted.
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