NEW YORK -- General Electric will sell its private-equity business in a deal valued about $12 billion as the company continues to focus on its core businesses and exits a banking sector now under stricter oversight.
The U.S. Sponsor Finance business, which includes Antares Capital, General Electric Capital's lending business to private-equity-backed middle market companies, will be sold to the Canada Pension Plan Investment Board, alongside a $3 billion bank loan portfolio.
General Electric is looking to sell most of the assets of its $500 billion General Electric Capital over the next 18 months, but it plans to keep the financing components that relate to its industrial businesses. The Fairfield, Conn., company is transforming itself back into an industrial conglomerate that makes large, complicated equipment for other businesses.
General Electric Capital Chief Executive Officer Keith Sherin said Tuesday in a telephone interview that the company is in talks with "dozens" of prospective buyers as it sheds the bulk of the banking operations, he said.
"We wanted to focus first on businesses that have a tremendous amount of franchise value," Sherin said. "The customer base was going to be hesitant to do business with us until they knew who the ultimate creditor was going to be."
Investors had long pushed for General Electric to get rid of its finance unit, though it had once been extremely profitable, as federal regulations and tough market conditions made it less lucrative and at times more risky.
General Electric spun off its consumer credit card business, Synchrony Financial, into a separate publicly traded company in July. It sold a 51 percent stake of NBC Universal to Comcast Corp. for $13.75 billion in 2011. Two years later, Comcast bought General Electric's remaining 49 percent stake in NBC Universal for $16.7 billion.
General Electric Co. spun off its insurance business into a separate publicly traded company, Genworth Financial Inc., in 2004. It sold its reinsurance business to Swiss Re in 2006, and a year later it sold its plastics business to Saudi Basic Industries Corp. General Electric sold silicones to private investment group Apollo Management LP for $3.8 billion in 2006 and sold its security business to United Technologies for $1.82 billion in 2010.
General Electric said Tuesday that it is on pace to execute sales of $100 billion by the end of the year.
The U.S. Sponsor Finance transaction is targeted to close in 2015's third quarter.
Information for this article was contributed by Richard Clough of Bloomberg News.
Business on 06/10/2015