By Ted Mann, Ben Dummett and Chelsey Dulaney
General Electric Co. has agreed to sell its
private-equity-lending unit to Canada's largest pension fund in a
deal valued at about $12 billion, marking a major step in the
industrial giant's retreat from banking.
The Wall Street Journal had reported that the two companies were
nearing a deal earlier this week.
GE said it would sell its sponsor finance business, which
includes private-equity lending business Antares Capital, and a $3
billion bank loan portfolio to Canada Pension Plan Investment
Board. Antares Capital will keep its name and operate as a
stand-alone business.
The deal is a step forward in GE's effort to sell off the bulk
of its $500 billion GE Capital unit. GE is largely getting out of
the banking business after years in which investors urged the
company to return to its roots as market conditions and federal
regulations weigh on the unit's returns.
With the deal, GE has unveiled $55 billion worth of asset sales,
putting the company on track to reach its goal for $100 billion in
sales by the end of the year.
The deal, which is expected to close in the third quarter of the
year, also marks one of the biggest financial takeovers since the
credit crisis and would rival Wells Fargo & Co.'s roughly $15
billion purchase of Wachovia Corp. in 2008.
Since the crisis, GE hasn't been able to rely as heavily on the
use of short-term debt called commercial paper to fund GE Capital
loans. Without that cheap source of capital and with new federal
restrictions on leverage, or the amount of borrowed money it can
use, GE says its investments in the lending business weren't
bringing in the returns the company could earn by deploying the
money elsewhere.
Write to Ted Mann at ted.mann@wsj.com, Ben Dummett at
ben.dummett@wsj.com and Chelsey Dulaney at
Chelsey.Dulaney@wsj.com
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