Lockheed Said to Mull Sale of $600 Million Asset Portfolio

  • U.S. defense and security company wants to reduce PE exposure
  • Move would be part of broader retirement-asset management

Lockheed Martin Corp., the largest global defense company, is exploring a sale of $600 million in alternative assets to reduce exposure to private-equity funds, people with knowledge of the matter said.

The portfolio is held by the Lockheed Martin Investment Management Co., a subsidiary of Lockheed that manages employees’ post-retirement plans, said the people, who asked not to be identified because the information is private. Lockheed is working with an adviser and a deal may be completed by the end of the year, the people said.

Lockheed is planning several divestitures after agreeing to acquire helicopter maker Sikorsky for $9 billion this year. In October, Chief Executive Officer Marillyn Hewson said that the Bethesda, Maryland-based company is exploring a sale, spin off or Reverse Morris Trust transaction of its slower-growing information technology and services businesses by 2016. 

Standard & Poor’s downgraded Lockheed’s debt rating on Monday, citing its “expectation of a significant deteriorating in Lockheed’s forecasted credit metrics” as the company continues returning excess cash to shareholders despite the debt-financed acquisition of Sikorsky, said Chris Mooney, a Standard & Poor’s credit analyst in a statement.

The government businesses to be shed represent about $5.5 billion of total revenue, offsetting some of the sales gained from Sikorsky, the largest U.S. military helicopter-maker. Lockheed will probably use some of the proceeds for debt reduction, Mooney said.

Lockheed Martin Investment Management had more than $36 billion in assets under management at the end of 2014, according to the company’s annual report, of which $4.3 billion was alternative assets. About $2.9 billion was in private-equity funds, the report shows. Lockheed has a target of no more than 15 percent of its portfolio being invested in private equity.

A spokesman for Lockheed Martin declined to comment.

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