Canada Pension Plan Investment Board (CPPIB) said on Tuesday it has agreed to buy GE Capital‘s private equity lending portfolio for US$12 billion, in a deal that will greatly expand the largest Canadian pension fund’s lending business.
GE’s Chicago-based Antares unit is the leading lender to middle market private equity-backed transactions in the United States. Over the past five years, Antares has provided more than US$120 billion in financing.
“This acquisition exemplifies our strategy to achieve scale in key sectors through platform investments,” said CPPIB’s Chief Executive Officer Mark Wiseman in a statement. “It secures a market-leading business that is exceptionally well positioned.”
The previously reported deal had been widely expected to be finalized this week.
GE’s retreat from lending and a broader move to reduce its exposure to its finance arm comes as U.S. regulators move to curb aggressive lending by financial institutions. GE announced plans in April to sell US$200 billion worth of finance assets as it focuses on its industrial products business.
In a separate statement, GE said it plans to continue to run the Senior Secured Loan Program (SSLP) – a joint venture between affiliates of GE Capital and affiliates of Ares Capital; and its Middle Market Growth Program (MMGP), a joint venture between affiliates of GE Capital and affiliates of Lone Star Funds; for a period of time to provide CPPIB the opportunity to work with both parties.
If CPPIB is unable to reach deals with both parties GE said it plans to wind down its investments in those two programs.
With this deal, GE said it has now finalized US$55 billion worth of asset sales and it remains on track to complete roughly US$100 billion worth of asset sales this year.
GE and CPPIB expect the deal to close in the third quarter, pending regulatory approvals. J.P. Morgan Securities LLC and Citigroup advised GE on this transaction, while Credit Suisse and Morgan Stanley acted as CPPIB’s advisors.
CPPIB said Antares will be a strategic, long-term platform investment for its Credit Investments arm.
CPPIB has invested over US$17 billion in leveraged loans, high yield bonds, and mezzanine financings since 2009. The GE deal solidifies its foray into the lending sphere as it looks for investment opportunities for its more than $264 billion in assets under management.
(Reporting by Euan Rocha; Editing by Andrew Hay and W Simon)
(This story has bee edited by Kirk Falconer, editor of peHUB Canada)
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