General Electric Co. said Tuesday that it has agreed to sell its
European private-equity finance business to Japan's Sumitomo Mitsui
Banking Corp. for about $2.2 billion, the latest step in the
industrial conglomerate's retreat from banking.
Known as a sponsors unit, the business finances buyouts and
other transactions for private-equity firms in Europe.
GE said it would keep its $1 billion investment in the European
Senior Secured Loan Programme and European Loan Programme. The deal
is expected to close in the third quarter of the year.
The Wall Street Journal had reported that the companies were
nearing a deal on Monday.
The Japanese bank prevailed over other bidders, including Apollo
Global Management LLC and Ares Management LP, people familiar with
the matter said.
A deal comes on the heels of GE's agreement to sell its
vehicle-fleet financing businesses in the U.S., Mexico, Australia
and New Zealand for $6.9 billion and a separate deal for its
European fleet business, both announced Monday.
GE is shedding a large portion of its GE Capital business's $500
billion in assets.
Earlier in June it agreed to sell its U.S.
private-equity-lending unit to Canada's largest pension plan in a
deal valued at $12 billion.
SMBC has been keen on buying some of GE's assets, including its
Japanese finance unit and U.S. railcar-leasing business, people
familiar with the matter have said.
SMBC also is no stranger to the European leveraged-finance
business, having entering the market in 1997, according to its
website.
The bank's European unit has around $1.9 billion of outstanding
commitments, having provided loans to buyout and other
transactions, its website says.
GE's withdrawal from banking comes after investors urged the
company to return to its industrial roots as market conditions and
federal regulations weighed on returns.
Separately, GE said Tuesday that it won't close the sale of its
appliances business to Electrolux AB in the second quarter of the
year as it is still waiting for clearance from the Justice
Department. GE said it hopes to close the deal by the end of the
year and expects an after-tax gain of 5 cents to 7 cents a share at
closing.
Write to Gillian Tan at gillian.tan@wsj.com, Ted Mann at
ted.mann@wsj.com and Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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