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GE
Asset Management had $115 billion in assets under management as
of June 30, according to GE, and manages retirement plans for
the vast majority of GE's 136,000 U.S. employees as well as
assets for outside institutional investors including third-party
retirement plans.
The plan to unload the asset management arm comes after GE
announced in April it would seek to sell some $200 billion of
its GE Capital assets as it moves away from financial services
and focuses more on manufacturing jet engines, power turbines
and other big-ticket industrial equipment. GE Asset Management
is separate from GE Capital.
The company said proceeds from the transaction would be
deposited into the GE Pension Trust, increasing trust assets
used to pay GE pension plan benefits.
GE said in its annual filing that the GE Pension Plan was
underfunded by $15.8 billion at the end of last year, compared
to $4.7 billion as of the end of 2013.
GE will retain responsibilities as plan sponsor following any
sale, and is appointing an independent fiduciary to review the
transaction.
GE Chief Executive Jeff Immelt said there had been "significant
interest" over time from investment firms in acquiring the
business.
"As we continue to transform GE to focus on our industrial core,
now is the right time to explore such a sale," Immelt said in a
statement.
Assets in GE's principal pension plans earned 5.9 percent last
year, according to the company's annual report. Average annual
returns through last year were 9 percent over five years, 5.9
percent over 10 years and 8.4 percent over 25 years. The company
said in the annual report it assumed a long-term expected return
of 7.5 percent.
The average return for the top 100 U.S. corporate pension plans
was 10.9 percent in 2014, according to benefit consulting firm
Milliman.
According to Morningstar, a group of 17 funds GE manages for
outside investors and amounting to about $17 billion in assets
ranked on average in the top 35 percent compared with similar
funds, based on the past 10 years' performance.
GE Asset Management has about 300 employees, most in Stamford,
Connecticut, where the unit is based.
GE said it hired Credit Suisse as its investment banker in the
transaction.
(Reporting by Lewis Krauskopf in New York; Editing by Nick
Zieminski and Christian Plumb)
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