In hindsight, most private debt managers will say General Electric’s decision to sell off its lending division makes sense, as the firm is regulated like a bank and was also burdened with the systemically important financial institution label. Though when the sale announcement first surfaced, it took the industry by surprise. Many were taken aback that GE would get rid of such a large and successful business.
Many expected this unit and most other parts of GE to be sold to banks, asset managers or insurers. A Canadian pension fund was not high on the list of acknowledged or suspected bidders. Indeed, the other front-runners for the business were banks and asset managers. They included Ares Management, Apollo Global Management, Guggenheim Securities, KKR and Sumitomo Mitsui Banking Corp. The firms that have been scooping up other units and GE Capital portfolios also include a variety of banks, insurers and asset managers.
CAPITAL COSTS AND STRUCTURE
GE Capital has historically offered low interests rates to borrowers. Antares executives and other industry experts tell PDI they will be able to keep costs down once they are operating under a pension fund.
The sale did not include the assets held within the SSLP (Senior Secured Loan Program) partnership that GE Antares runs with the Ares Capital Corporation (ARCC) BDC. Because Ares Management was in the running to bid for the GE Antares unit, Ares and Antares executives couldn’t discuss the venture’s future until a deal closed. Once the CPPIB deal was announced, Antares and its new owner opened talks with Ares about what to do with the SSLP.
BUSINESS AS USUAL
Perhaps a successful marriage is coming to an end. Or maybe yet more surprises will move the situation along again. The industry is watching with bated breath to see what happens. In the meantime, the Antares unit and GE Capital business lines up for sale continue lending, which is perhaps not all that surprising, as borrowers are keen to benefit from GE’s low cost of capital before that window closes.
And following a period in limbo, for the Antares team, it’s a busy time: “Our inbox is chock full of e-mails from people that are interested in re-connecting. It’s not surprising. There was a lot of uncertainty of what was going to happen for us, and regulated entities have been a challenging place for people to work, so the prospects of having clarity and not bein