The Canada Pension Plan Investment Board (CPPIB) has signed an agreement with GE Capital to acquire the company’s US sponsor lending business, GE Antares Capital, for $12 billion. The Canadian pension fund is acquiring the unit through its CPPIB Credit Investments affiliate. The transaction is subject to regulatory approvals and is expected to close during the third quarter. The business will operate as Antares Capital and still be led by its two founders David Brackett and John Martin.
The acquisition doesn’t automatically include the SSLP (Senior Secured Loan Program) partnership with Ares Capital, though CPPIB and Ares plan to discuss the program in the next few months to see if they can co-run it. If they don’t come to an agreement, GE Capital and Ares would wind down the program, said GE Capital spokeswoman Sue Bishop.
Based in Chicago, GE Antares is the lender to mid-market private equity sponsors in the US, offering unitranche and senior secured financing to mid-market companies. Over the past five years, Antares has provided more than $120 billion in financing.
“This acquisition exemplifies our strategy to achieve scale in key sectors through platform investments. It secures a market-leading business that is exceptionally well positioned to deliver value-building investment flows,” Mark Wiseman, president and chief executive at CPPIB, said in a statement.
Upon closing, Antares will operate as a standalone, independent business led by its own board of directors. GE Antares’ 300 employees are expected to stay on with the unit. The acquisition will expand CPPIB’s existing Principal Credit Investments portfolio.
“We have been studying the attractive economics of the US middle market lending sector for several years. Antares represents a rare opportunity to invest in the leading lender in this segment of the market and involving companies owned by private equity sponsors,” commented Mark Jenkins, senior managing director and global head of private investments at CPPIB. “With this single transaction, we immediately acquire turn-key scale and a long-term partnership with the best, most experienced management team in the market.”
“CPPIB brings deep understanding and knowledge of our market and permanent capital, which will allow us to serve our customers in both good and challenging times. We also look forward to continuing to offer our clients our existing best-in-class financing products and anticipate broadening our capabilities,” Brackett said in a statement.
“In partnering with CPPIB, Antares is ideally positioned to continue, and expand upon, its market leading support for our private equity sponsor client base,” commented Martin. “In CPPIB we will have a strategic owner who is committed to our business model, with unparalleled capital resources. Additionally, this partnership will allow Antares to better address the realities of today's leveraged lending environment. Our team will invest side by side with CPPIB Credit Investments and is thrilled about having the opportunity to build our franchise in the years ahead.”
CPPIB’s Principal Credit Investments (PCI) group focuses on financing globally and across the capital structure. The group makes direct primary and secondary investments in leveraged loans, high-yield bonds, mezzanine, intellectual property and other instruments. PCI participates in event-driven opportunities, such as acquisitions, refinancing, restructurings and recapitalizations, and targets positions between $50 million to $1 billion in any single credit. The team underwrites on a standalone basis or with select partners depending on the investment opportunity. Since its first investment in 2009, the group has worked on $17 billion in transactions.