Winners in Depth
GE Capital Grew Middle-Market Business to Take LENDER OF THE YEAR
The lending unit of General Electric added a new unit and increased the number of loans for PE platform acquisitions
Providing one quarter of all loans made in the middle market, GE Capital ranks as the largest lender in the space. Nevertheless, the lending unit of General Electric (NYSE: GE) did not rest on its laurels in 2014. GE Capital added a new unit and increased the number of loans it made for private-equity platform acquisitions by 55 percent. It also gave borrowers unique access to the resources of its parent company.
"It was a very good market to be selling assets," says Stuart Aronson (pictured), CEO of GE Sponsor Finance at GE Capital. "There is a lot of under-deployed capital in the PE marketplace, so even though prices were high, we saw more customers buying platform companies for the basis of doing add-on acquisitions."
The Norwalk, Connecticut-based lender closed 248 middle-market loans in 2014, worth an aggregate $30 billion in value, an increase from the 229 loans worth $29 billion in 2013. GE Capital also helped fund 83 new private-equity platform investments, up from 35 the previous year, for a 55 percent increase.
The lender worked on deals in several active sectors, including business services, industrial packaging and oil and gas. GE acted as administrative agent on a $260 million senior secured credit facility to support Vestar Capital Partners' acquisition of Institutional Shareholder Services, a corporate governance tool for the financial services industry. The lender started a relationship with the Pritzker Group, acting as administrative agent on a $251 million senior credit facility that supported Pritzker's acquisition of packaging company Technimark LLC. GE was also administrative agent on a loan for the Jordan Co. LP's acquisition of Gulfstream Services, an oil and gas services company.
"The markets do all sort of interesting things year to year, but just because we've been the biggest doesn't mean we stand still," Aronson says. "That's why we created the Middle Market Growth Program."
Launched in February 2014, the Middle Market Growth Program is GE Capital's second unit to focus on providing loans to middle-market businesses. The Middle Market Growth Program lends up to $250 million per deal, and was responsible for $1.1 billion in loan value for the year. GE Capital has a hold size of up to $175 million for those transactions.
GE Capital gives its clients something other lenders can't - an in to the Access GE program, which connects borrowers with the industrial businesses and global research centers of the lender's parent company. In 2014, GE Capital initiated 60 potential joint research and development projects, new supplier relationships and licensing opportunities for private equity clients and their portfolio companies. For example, GE Capital introduced the Riverside Co. and its portfolio company G&H Orthodontics to GE Lighting in Hungary for help manufacturing ceramic braces.
"In markets like 2014, there are tons of competitors and people can go anywhere, so we invest a lot of money to make sure what we offer is more than just a financing," Aronson says.
In March, GE announced the sale of its Australia and New Zealand consumer lending operation. "The recent asset sales are part of a long-announced plan to reduce GE Capital’s overall share of GE earnings. We’re still committed to this business," the company says.