Starwood Property Trust has signed an agreement with GE Capital to acquire its GE Energy Financial Services’ Project Finance Debt Business and loan portfolio for $2.56bn.
Image: GE intends to reduce the asset base size of GE Capital. Photo: courtesy of General Electric.
GE’s Energy Project Finance Debt Business includes a vertically integrated platform and has 21 full-time employees across loan origination, underwriting, capital markets and asset management.
It has senior secured debt in thermal power, renewable energy and midstream assets, primarily in the US.
Additionally, the GE’s loan portfolio comprises 51 senior loans secured by energy infrastructure real assets.
GE said that the sale of energy investing unit is part of its efforts to reduce the size of asset base in support of a smaller and more focused GE Capital.
GE Capital president Alec Burger said: “The sale of the Project Finance Debt Business is aligned to GE Capital’s overall balance sheet reduction efforts and reflects progress against our strategy announced in January 2018.
“The business is highly complementary to the Starwood Property Trust platform, which has deployed over $44 billion of capital since its inception in 2009 and has vast lending experience across diversified assets and geographies.”
Planned to be closed in the third quarter of 2018, the deal is subject to customary conditions.
Starwood Property Trust chairman and CEO Barry Sternlicht said: “Today we are pleased to announce we are adding a new cylinder to our Company, with the return on investment profile and ability to scale to be material to our $14 billion enterprise.”
“GE’s Energy Project Finance Debt Business is one of the preeminent lenders in the field and we expect the team to flourish as we expand their product line in the future.
“This new segment also provides additional asset duration and the majority of the portfolio is backed by contracts with investment grade companies.”
The acquisition is part of Starwood’s plan to diversify its business from commercial real estate.
Starwood said the GE unit will complement its Starwood Energy Group’s platform, which specializes in energy infrastructure equity investments.