CPPIB creates mid-market powerhouse with GE unit buy

Thu Jun 11, 2015 1:48pm EDT
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By Leela Parker Deo

NEW YORK (Reuters) - Canada Pension Plan Investment Board's (CPPIB) $12 billion acquisition of GE Capital's sponsor finance business vaults Canada’s largest pension fund into the top tier of U.S. middle market lenders, market participants said on Thursday.

The acquisition puts Chicago-based Antares Capital, a highly-regarded unit of GE Capital Corp (GEB.N: Quote) that lends to private equity buyouts of small and mid-sized U.S. companies, under CPPIB's ownership.

GE Capital is the financial services unit of conglomerate General Electric Co (GE.N: Quote).

Until recently, CPPIB's credit strategy focused mainly on large companies via its Principal Credit Investments (PCI) group, which has lent $17 billion globally since 2009 in primary and secondary leveraged loans, high yield bonds and mezzanine debt.

“In one transaction we are able to access the middle market in scale and acquire a best in class origination, execution and asset management platform,” said Mark Jenkins, CPPIB's senior managing director and global head of private investments.

“With the portfolio, we acquire the exposure we want and with the platform, we acquire the machine to continue to grow that exposure. This is completely complementary to CPPIB’s credit investment portfolio,” he added.

Antares will operate as a standalone, independent business with its own capital base and will be governed by its own board of directors. The business will also retain the Antares brand and will remain under the helm of managing partners David Brackett and John Martin.

CPPIB is contributing $3.85 billion in cash toward the $12 billion purchase price and the rest will be financed with debt provided by a group of global investment banks, Jenkins said.   Continued...