Reports on Thursday suggest General Electric has found a buyer for its private equity unit. According to the reports, French alternative asset manager Ardian is buying GE Capital Equity. The deal could be worth $500 million.
The News Break Out
News agencies started reporting the news on Thursday, with sites such as Bloomberg citing insider sources. According to the news agency, Ardian had won an auction process earlier this month and the deal could be made public soon.
The deal is expected to be around $500 million, although the two parties are still discussing the final details. It is thought the current management team in charge of the private equity unit could continue even after the acquisition. The team, led by Patrick Kocsi, will continue managing the assets and there might be an additional injection of capital to complete future deals.
Sources said the French firm won the unit in an auction process earlier this month. The process was reportedly run by Evercore Partners.
GE Capital equity currently manages around $1 billion worth of assets. Its main office is located in Norwalk and the firm has focused on minority stakes in companies valued between $1 million to $15 million. So far, representatives from GE and Ardian have remained silent over the possible deal.
Leaving the Alternative Asset Field
GE has been looking for a way out from the alternative asset investment field for a while now. It has previously been untwining its lending arm to focus its attention on manufacturing.
It has already sold most of the real estate portfolio to private equity group Blackstone Group and Wells Fargo & Co. The deal took place this April and it was worth around $23 billion. Furthermore, the Canada Pension Plan Investment Board bought GE’s direct-lending business in June. That transaction was worth $12 billion.
Part of GE’s decision has been about clearing the regulatory burden. If the deal were to go ahead as reported, it would mark the end of GE’s involvement in the alternative asset investment field. So far, a number of financial institutions have been shedding off their involvement in alternative assets, as the regulatory environment in the industry continues to tighten.
Old Investment for Ardian
The French alternative asset manager is no stranger to GE assets, as it has previously been involved with them. It acquired a $1.3 billion portfolio from GE Capital in 2014. At the time, Ardian had just raised a $10 billion fund of funds and the assets it bought were limited partnership interests in private equity funds.
Furthermore, the firm has been involved with private equity assets more recently. In March this year, the firm bought stakes in buyout funds of US market managers. Ardian bought 350 assets with the deals being worth around $1 billion. Some of its current portfolio companies include ICCNexergy and PetSmart.
The firm closed its third debt fund earlier this month, having raised $2.25 billion. It aims to invest in mid-market companies in Europe. The firm currently has around $50 billion worth of assets in its portfolio.