Blackstone and KKR join race for GE unit

Blackstone, KKR, Apollo and Ares are among at least five groups expected to make an offer to acquire General Electric's $16bn buyout-lending arm, said people familiar with the matter.

The four private equity groups and SunTrust Banks are expected to make offers as early as Thursday when the first round of bids open, people close to the process said.

GE's private equity lending business is considered to be one of the crown jewels of the nearly $200bn worth of assets at its finance unit, which the company put up for sale last month as part of a radical shake-up at America's best-known conglomerate.

Jeff Immelt, who succeeded Jack Welch as chief executive more than 13 years ago, said in April that GE would sell or spin off most of GE Capital as the division has been negatively affecting the rest of the group.

The company, which has sold most of its property assets to Blackstone and Wells Fargo for $26.5bn, plans to return to its industrial roots, Mr Immelt said last month.

GE also plans to sells its US and global commercial lending operations, its international consumer business and its global fleet financing operation.

Wells Fargo is believed to be the most likely acquirer for the US commercial lending business, which is worth about $74bn, said people familiar with the matter.

However, other US, Canadian and Asian banks have expressed interest in the unit, according to financial advisers. Private equity groups are also looking at the unit but they are unlikely to beat a large bank in a bid.

Blackstone could be seen as a frontrunner to acquire the private equity lending business given it has already acquired GE's real estate assets, a move that helped the conglomerate kick-off the entire sale process, a banker not involved in the deal said.

However, Ares is seen by some analysts as a better fit as it already operates a similar business to GE's, which lends predominantly to midsized buyout firms.

GE Antares Capital, which the conglomerate acquired in 2005, represents the biggest chunk of the private equity lending unit. GE said in a presentation that its lending unit, which offers loans in the range of $30m to a little more than $500m, has long-term relationships with more than 30 buyout firms.

Bloomberg reported last month that SunTrust Banks as well as Apollo and Ares were weighing offers for GE's unit.

JPMorgan, Citigroup and Bank of America, which are helping GE sell the private equity lending unit, declined to comment.

Blackstone, KKR, Apollo, Ares and SunTrust also declined to comment.

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