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GE EFS sells $1bn portfolio to Apollo but remains active in RE

GE Energy Financial Services (EFS) has agreed to sell a $1bn portfolio of energy assets, including stakes in renewables projects, to US asset management firm Apollo Global Management, amid the ongoing restructuring of General Electric’s global businesses.

Moreover, New York-based Apollo and GE will form an “ongoing relationship” that could lead to future sales of energy infrastructure assets, the companies said.

The deal comprises 20 investments in renewable energy, contracted natural gas fired generation and midstream energy infrastructure assets, primarily in the US, with the companies declining to reveal project-level detail.

Financial details were not disclosed, and the deal is expected to close by the end of the year.

Alongside Aviation financing, EFS is one of just two industrial financing units left at GE, as the struggling American giant shrinks its GE Capital division and moves to exit a number of industrial businesses altogether.

Last week GE’s board surprised Wall Street by ousting chief executive John Flannery after just a year in the job, to be replaced by Larry Culp, formerly chief executive of smaller industrial conglomerate Danaher.

Even as GE exits many industries, it has stood behind its Paris-based Renewable Energy unit, including recent unveilings of major upgrades to both its on- and offshore wind turbine platforms, known as Cypress and Haliade-X respectively.

In August GE EFS announced it had facilitated the raising of €90m ($103m) in project financing for a 100MW wind project in the Ukraine, and GE is investing in its project-development capabilities to help bring in turbine orders.

Speaking last week at an industry conference in New York, Kevin Walsh, the outgoing head of renewables at EFS, said that GE is “still playing on the tax-equity side” in the US wind market.

“We’re doing it with a smaller balance sheet,” he said, “but we’re absolutely there to support folks who choose our technology.”

Apollo’s investment is part of a broader trend of institutional investors pushing into energy infrastructure broadly and renewable specifically, as they find themselves caught between low interest rates on the one hand and frothy stock valuations on the other.

“We believe this transaction provides us with a unique opportunity to acquire a diversified portfolio of high-quality energy infrastructure assets with attractive risk-adjusted return profiles,” says Geoffrey Strong, senior partner at Apollo.

“In addition, we look forward to working with GE’s team on future energy infrastructure investment opportunities.”