By Ryan Dezember And Gillian Tan 

Several private-equity firms are vying to buy General Electric Co.'s unit that funds leveraged buyouts, in a sale process that could fetch more than $17 billion for GE and be the largest U.S. finance deal since the financial crisis.

KKR & Co., Apollo Global Management LLC and Ares Management LP are among the firms expected to submit final-round bids for the unit Thursday, according to people familiar with the sale process. Canada's largest pension fund, Canada Pension Plan Investment Board, and Guggenheim Securities also are expected to submit offers, the people said.

An agreement could be announced as soon as next week, the people added, and is on track to surpass deals including Wells Fargo & Co.'s 2008 purchase of Wachovia Corp. and Toronto-Dominion Bank's 2010 purchase of Chrysler Financial Corp., according to Dealogic.

A deal would be a big boost for the private-equity firms competing for a business that finances their buyout deals and those of their rivals. Several have lending and debt-investing arms of their own. They have taken a bigger share of the lucrative business as banks, under pressure from regulators, become increasingly wary about financing debt-laden takeovers. Private-equity firms announced $37 billion in new investments through May 15, the lowest year-to-date total since 2012, according to Dealogic.

Middle-market lending is at "top of mind for everyone today," Apollo co-founder Josh Harris said at the Bernstein Strategic Decisions Conference on Wednesday. He called GE Capital the "largest and most successful lender on the planet." He didn't comment on Apollo's interest.

The GE business, which is part of GE Capital, focuses mainly on financing midsize buyouts. It lends money to pay for the buyout of a company by the private-equity firm and to help fund its operations. In all, the business encompasses a bundle of more than 400 loans, most of which are for less than $100 million. The business consists of a team of about 300 people that originate new loans and manage the portfolio. GE is eager for a buyer to absorb that group, the people said.

The sale is part of GE's efforts to unload the bulk of its GE Capital business. Last week, GE Chief Executive Jeff Immelt said he expected to announce $20 billion to $30 billion in additional sales by the end of June. Keith Sherin, the CEO of GE Capital, told investors Wednesday that the company would be largely done with asset sales by the end of 2016. At the time it announced the broad retreat from banking, the company agreed to sell a $23 billion real-estate portfolio to Wells Fargo & Co. and Blackstone Group LP. GE is also selling a portfolio consisting of $74 billion of loans to U.S. businesses.

A private-equity buyer would likely face some challenges running the business that GE didn't. The company's balance sheet and near-perfect credit rating gave the business cheap access to cash, which it could lend at higher interest rates. Private-equity firms will likely have to rely on banks as a capital source, which means new loans could be costlier for both the lender and borrowers.

And the auction may not produce a private-equity winner. Canada's CPPIB, which invests billions of dollars in buyout funds, has in recent years started making its own private-equity deals. And Guggenheim operates a direct-lending arm, which invested about $6.5 billion in 129 deals as of Sept. 30, 2014.

Some other bidders--such as foreign banks, sovereign-wealth funds and insurance companies--also are expected to participate in the final round of the auction, according to people familiar with the process.

Many of them could help fill a void left by the large banks, which have been under pressure from regulators to avoid lending to companies with high debt loads. After the financial crisis, U.S. regulators required banks to hold more capital on their books to ensure they can survive a sharp downturn. That has decreased their ability to hold onto assets on their books that regulators deem risky, such as some buyout loans.

Regulators also have pressured banks to limit the loans they extend to heavily indebted corporate borrowers, creating an opening for nonbank lenders to move deeper into the business.

Ares's dedicated direct-lending unit managed $28.7 billion across 34 funds as of March 31. That is roughly twice the size of its private-equity unit, which manages $14.8 billion.

Apollo earlier this month signaled plans to expand its sizable credit business, and KKR in April said it raised $1.34 billion for a second fund that will provide loans to companies, bringing its direct-lending total to roughly $5 billion.

"The lending landscape is being reshaped by a variety of factors, including geopolitical change, macroeconomic factors, and the regulatory environment," Chris Sheldon, KKR's co-head of leveraged credit, said at the time.

GE, which enlisted J.P. Morgan Chase & Co. and Citigroup Inc. to auction off the buyout-finance business, recently narrowed down the suitors from an initial round involving a dozen bidders.

The private-equity bidders are lining up financing from large banks to fund the purchase of the unit, according to people familiar with the matter. The financing is backed by the assets of the borrowers behind the loans being sold by GE, according to the people.

The firms are seeking to borrow roughly 85% of the GE unit's $16 billion book value, one of the people said.

Dana Mattioli contributed to this article.

Write to Dana Mattioli at dana.mattioli@wsj.com and Ryan Dezember at ryan.dezember@wsj.com

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