General Electric (NYSE: GE) is currently trying to sell its private equity financing unit to the Canada Pension Plan Investment Board. This comes on the back of General Electric’s announcement in April that it would try and reduce most of its banking business in the next two years. The private equity unit is called GE Capital Sponsor Finance and contains assessments surpassing 10 billion dollars. It offers financing for companies conducting leveraged transactions, growth funding, and recapitalization. Anonymous reports say that while still in negotiations, a deal with Canada’s largest pension fund seems to be on the horizon.
GE planned a strategic shift in April to sell most of GE Capital’s assets in order to consolidate back to focusing on their main businesses including manufacturing products for healthcare, aviation, energy, and transportation. The plan was to lessen exposure to financial volatility by streamlining the business units. This is also in stark contrast to the diversification plan laid out by former CEO Jack Welch. Current CEO Jeff Immelt announced that they anticipate their high valued industrials will generate more than 90% of their earnings by 2018.
The first step in this consolidation occurred through GE’s sale of GE Capital’s real estate assets for a sum of around 26.5 billion dollars. Canada Pension Plan Investment Board, or CPPIB, has about $264.6 billion in assets. In March, 2014, CPPIB increased its exposure to the U.S. finance market by buying U.S. insurance company Wilton Re Holdings for $1.8 billion.