GE to Sell Buyout Unit to Canada Pension Fund for $12 Billion -- Update

By Ted Mann, Ben Dummett and Chelsey Dulaney 

General Electric Co. has agreed to sell its private-equity-lending unit to Canada's largest pension fund in a deal valued at about $12 billion, marking a major step in the industrial giant's retreat from banking.

The Wall Street Journal had reported that the two companies were nearing a deal earlier this week.

GE said it would sell its sponsor finance business, which includes private-equity lending business Antares Capital, and a $3 billion bank loan portfolio to Canada Pension Plan Investment Board. Antares Capital will keep its name and operate as a stand-alone business.

The deal is a step forward in GE's effort to sell off the bulk of its $500 billion GE Capital unit. GE is largely getting out of the banking business after years in which investors urged the company to return to its roots as market conditions and federal regulations weigh on the unit's returns.

With the deal, GE has unveiled $55 billion worth of asset sales, putting the company on track to reach its goal for $100 billion in sales by the end of the year.

The deal, which is expected to close in the third quarter of the year, also marks one of the biggest financial takeovers since the credit crisis and would rival Wells Fargo & Co.'s roughly $15 billion purchase of Wachovia Corp. in 2008.

Since the crisis, GE hasn't been able to rely as heavily on the use of short-term debt called commercial paper to fund GE Capital loans. Without that cheap source of capital and with new federal restrictions on leverage, or the amount of borrowed money it can use, GE says its investments in the lending business weren't bringing in the returns the company could earn by deploying the money elsewhere.

Write to Ted Mann at [e-mail], Ben Dummett at [e-mail] and Chelsey Dulaney at [e-mail]

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