GE Buyout-Lending Unit Said to Interest SunTrust, Apollo, AresMatthew Monks, Jeffrey McCracken and Richard Clough
SunTrust Banks Inc., Apollo Global Management and Ares Management LP are weighing offers for a General Electric Co. unit in the U.S. that lends to private-equity firms, people familiar with the matter said.
GE is working with Citigroup Inc. to sell the business, which could fetch more than $10 billion, which is the face value of its outstanding loans, said the people, who asked not to be identified because the matter is not public.
The division is among the $200 billion of assets put up for sale this month at the company’s finance unit as Chief Executive Officer Jeffrey Immelt accelerates efforts to shrink GE Capital and focus on GE’s industrial operations. U.S. Bancorp, JPMorgan Chase & Co. and others have said they’re interested in bidding for the assets up for grabs.
Concern over possible staff defections at the so-called sponsor-finance unit are spurring GE to move swiftly on the sale, with first-round bids due in mid-May, said the people. GE is working with Bank of America Corp. on a separate sale process for its European private equity-lending arm, which has about $6 billion in loans, the people said.
Representatives for GE, Apollo, Ares, SunTrust, Citigroup and Bank of America declined to comment.
GE has about $16 billion invested in its private-equity group, according to an April 10 investor presentation. GE Antares Capital, the Chicago-based lender acquired in 2005, comprises the bulk of the unit, which arranges high-interest loans of $30 million to $500 million for leveraged buyouts. It does business with more than 300 private equity funds.
Ares is eager to pursue a deal for the U.S. operations because of concern that another buyer would sever the asset manager’s ties to business-credit specialist Senior Secured Loan Fund LLC, according to one person. Ares Capital Corp., a unit of Ares Management, co-manages Senior Secured with GE.
Apollo has been on the prowl for specialty finance businesses for years. The New York-based firm bid for OneMain Financial Holdings, the consumer lender Citigroup agreed to sell to Springleaf Holdings in March. Its insurance subsidiary, Athene Holding Ltd., paid $523 million two years ago for MidCap Financial LLC, a business lender that competes with GE Antares.
SunTrust has been investing in its corporate investment bank, SunTrust Robinson Humphrey, whose private equity-lending division has offices in New York, San Francisco and Atlanta, according to its website. Chief Financial Officer Aleem Gillani told analysts on a conference call this week that Atlanta-based SunTrust is open to pursuing acquisitions.
GE has also held talks with Mitubishi UFJ Financial Group Inc., Blackstone, Wells Fargo and Apollo about selling pieces of its $74 billion-asset commercial lending arm, people familiar with the matter said this week.
Immelt has been working to wean GE from dependence on GE Capital since the unit put the parent company at risk during the 2008-09 financial crisis. With the decision to unload the bulk of GE Capital, that effort is quickening, and was punctuated by the April 10 agreement to sell most of GE’s real estate to Blackstone Group LP and Wells Fargo & Co. for $23 billion.
GE projects that by 2018, after the restructuring is complete, GE Capital’s share of corporate profits will shrink to less than 10 percent, down from 42 percent last year.
The portions being retained, such as aviation leasing and energy financing, will be those that support the parent’s manufacturing lineup, which spans jet engines to oilfield equipment to diesel locomotives.