General Electric Company Sold Private-Equity Lending Unit

General Electric Company (NYSE:GE) was in the midst of finalizing a deal with the Canada Pension Plan Investment Board to spin-off half of its US-based private-equity lending business, Bloomberg reports. People familiar with the matter told Bloomberg that part of the private-equity lending business will be bought by Ares Management LP (NYSE:ARES).

Initially, General Electric was seeking to spin-off the segment for $18 billion, but now the said deal with Canada Pension Plan Investment is valued at $10 billion. The rest of the assets, valued at $8 billion, are expected to be bought by Ares.

The sale of the private-equity segment is based on General Electric’s prior announcement of selling approximately $20-30 billion worth of assets by the end of June this year. Last week, GE also announced that it has appointed JPMorgan Chase & Co. (NYSE:JPM) to look for a suitable buyer for GE Capital’s Healthcare Financial Service segment – to be sold for approximately $10 billion.

There are two main sub-segments under the private-equity lending unit: Senior Secured Loan Program and GE Antares Capital. GE Capital has been managing Senior Secured Loan in partnership with Ares Capital. The unit had approximately $9.9 billion worth of funding deals as of the end of December, 2014.

General Electric however plans to keep its two financial units, Aviation and Energy, as they support the company’s other industrial segments. Following the sale of GE’s Real Estate segment for $26 billion earlier this year,the current deal (if finalized) will be the second biggest for General Electric this year.

Meanwhile, Canada Pension Plan Investment will be able to compete with Wells Fargo & Co (NYSE:WFC), which bought Wachovia Corp in fiscal’08, after the acquisition is finalized.

General Electric put up its private-equity lending unit for sale at the end May, after which the company started receiving bids from KKR & Co. L.P. (NYSE:KKR), Apollo Global Management LLC (NYSE:APO), and Ares Management LP. It is expected that General Electric might announce the official spin-off by day end today.

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