General Electric is near a deal to sell the bulk of a division that finances leveraged buyouts to a major Canadian pension fund, people briefed on the matter said on Sunday, as the industrial giant seeks to shed most of its GE Capital finance arm.
An agreement between GE and the pension fund, the Canada Pension Plan Investment Board, could be announced as soon as this week, this person said. The Canadian fund is expected to take over assets totalling more than $10 billion.
The talks are over the United States operations of the private equity division and exclude European assets, one of these people added.
The retreat from banking is a fundamental reshaping of one of America's most visible corporations, which had relied on its lending arm to power its profits for much of the past three decades. But since the financial crisis, when GE Capital's struggles to borrow badly wounded GE, the conglomerate's management team, led by its chief executive, Jeffrey R Immelt, has moved to slim down the business.
What GE will hold onto are financial operations that are closely tied to its core industrial businesses, like equipment for the health care and oil and gas industries.
The lending arm, known within GE as the sponsor finance unit, was seen as one of GE Capital's crown jewels. Bidding for the division drew a wide array of suitors, including major private equity firms like Apollo Global Management and Ares Management, eager to take over a premier lender.
The firms had asked about a potential sale of the sponsor finance business even before GE announced its expansive plans to shrink GE Capital.
Selling the private equity lending unit quickly was a priority for GE and its advisors, to ensure that employees did not decamp for competitors amid uncertainty over the auction process.
The emergence of the Canada Pension Plan as the likely winner comes as somewhat of a surprise, given that other firms that have lending operations were also in the hunt. But the investment manager has become something of a private equity firm itself, bidding to buy a range of companies, from retailers to energy companies.
Among the companies that the pension fund has acquired are the high-end department store Neiman Marcus, which it bought along with Ares, and the British industrial parts manufacturer Tomkins, in a deal in which it teamed up with the Canadian private equity firm Onex.
A spokeswoman for GE Capital declined to comment on the talks, which were reported earlier by The Wall Street Journal.
©2015 The New York Times News Service
An agreement between GE and the pension fund, the Canada Pension Plan Investment Board, could be announced as soon as this week, this person said. The Canadian fund is expected to take over assets totalling more than $10 billion.
The talks are over the United States operations of the private equity division and exclude European assets, one of these people added.
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If completed, a sale would be a huge part of GE's ambitious campaign to retreat from banking, part of a sweeping effort to refocus on its industrial roots. The conglomerate announced in April that it planned to sell the bulk of GE Capital within two years, leading to billions of dollars in deals.
The retreat from banking is a fundamental reshaping of one of America's most visible corporations, which had relied on its lending arm to power its profits for much of the past three decades. But since the financial crisis, when GE Capital's struggles to borrow badly wounded GE, the conglomerate's management team, led by its chief executive, Jeffrey R Immelt, has moved to slim down the business.
What GE will hold onto are financial operations that are closely tied to its core industrial businesses, like equipment for the health care and oil and gas industries.
The lending arm, known within GE as the sponsor finance unit, was seen as one of GE Capital's crown jewels. Bidding for the division drew a wide array of suitors, including major private equity firms like Apollo Global Management and Ares Management, eager to take over a premier lender.
The firms had asked about a potential sale of the sponsor finance business even before GE announced its expansive plans to shrink GE Capital.
Selling the private equity lending unit quickly was a priority for GE and its advisors, to ensure that employees did not decamp for competitors amid uncertainty over the auction process.
The emergence of the Canada Pension Plan as the likely winner comes as somewhat of a surprise, given that other firms that have lending operations were also in the hunt. But the investment manager has become something of a private equity firm itself, bidding to buy a range of companies, from retailers to energy companies.
Among the companies that the pension fund has acquired are the high-end department store Neiman Marcus, which it bought along with Ares, and the British industrial parts manufacturer Tomkins, in a deal in which it teamed up with the Canadian private equity firm Onex.
A spokeswoman for GE Capital declined to comment on the talks, which were reported earlier by The Wall Street Journal.
©2015 The New York Times News Service