Bulk of assets of Mubadala GE Capital sold to US-based private equity group

Mubadala and GE Capital have agreed a deal to sell the bulk of their commercial finance joint venture to a unit of US private equity firm Apollo Global Management.

Abu Dhabi-based Mubadala GE Capital (MGEC) has said that it has signed a deal to sell “substantially all of the assets” of the company and its subsidiary firms to MidCap Financial. A price for the sale, which will be paid in cash, has yet to be agreed and “is subject to customary adjustment”, according to a statement issued by the firm.

It also said the deal was subject to conditions and “may be terminated under certain circumstances”. It is expected to close in the final quarter of 2015.

Rumours about a sale of the business, which had net assets of US$954 million at the end of June (up from $885m at the end of 2014) first emerged in April when GE announced that it was exiting the commercial finance business.

At the time, however, Mubadala said there were “no current plans to change the shareholding or strategy of the business”, adding that the 50/50 joint venture was an important part of the companies’ ongoing partnership that continued to deliver profitable growth.

In the first six months of 2015, the business declared an 8.6 per cent increase in net profit to $68.6m on the back of a 31 per cent hike in net interest income to $104m.

MidCap Financial said as part of the deal it is acquiring a book of corporate and property loans worth $3.6 billion. These are largely loans made to US and UK-based companies.

MGEC’s last filed accounts to June 30 stated it had a loan book worth $4.2bn, which comprised the bulk of its total asset base of $4.6bn.

Midcap Financial chief executive, Steve Curwin, said: “This acquisition advances our strategy to be a significant player in the middle market lending space and builds on our franchises in a number of markets.

“The opportunity to add a highly diversified portfolio of this quality to our platform is unique.”

Midcap Financial is an asset-based lender which provides loans to the healthcare, life sciences and property sectors, as well as leveraged loans to private equity-backed companies.

Apollo Global Management partner Howard Widra said: “We believe that the high quality portfolio that MGEC has built will greatly accelerate our direct origination efforts in the middle market.”

A spokesman for MGEC said that the joint venture business, based in Abu Dhabi Global Market Square on Al Maryah Island, would remain in operation and that other partnerships between Mubadala and GE – including the GE Innovation Centre at Masdar – are unaffected by the sale. Mubadala also retains a 0.76 per cent stake in General Electric, according to its website.

Citigroup has acted as financial advisor to MGEC on the deal and Allen & Overy provided legal advice.



Michael Fahy

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