GE said today it would sell its U.S. Sponsor Finance business for approximately $12 billion to Canada Pension Plan Investment Board. The deal marks another big milestone on GE’s path to sell most of its banking businesses and return to industrials, a strategic shift the company announced in April.
“This announcement is the next step in GE’s transformation to a more focused industrial company,” said Keith Sherin, chairman and CEO of GE Capital. “The sale of Sponsor Finance aligns with our strategy to pair a smaller GE Capital with GE’s long-term industrial growth.”
GE had already agreed to sell GE Capital Real Estate assets for $26.5B.
The Sponsor Finance business is principally made up of Antares Capital, GE Capital’s lending business to private equity-backed middle market companies.
GE plans to sell most of its GE Capital assets over the next 18 months, a move that will reshape the company and further the role of its industrial businesses as the principal source of GE’s earnings.
GE Chairman and CEO Jeff Immelt said in April he wanted to “profoundly change the company” and “lead the next generation of industrial progress.”
GE estimates that by 2018, its industrial businesses will generate more than 90 percent of GE’s operating earnings, according to the CEO, up from 58 percent last year.
To date, GE Capital has announced sales of more than $55 billion and is moving toward the disposition of $100 billion by the end of of 2015.
The new transaction is subject to customary regulatory and other approvals. It is expected to close in the third quarter of 2015.