General Electric Co. will have little trouble finding a buyer for its asset management business, sources said, despite potential complications that aren't usually found in money manager merger and acquisition deals.
The Stamford, Conn., company announced Sept. 10 it was looking for a buyer for its GE Asset Management unit. GEAM spokesman Chris Linehan declined to give a price range, but sources estimated the business could sell for about $500 million.
Possible bidders named by sources include Ameriprise Financial Inc., Invesco Ltd., Franklin Templeton Investments, Goldman Sachs Group Inc. and possibly even BlackRock Inc. or State Street Corp. Spokesmen at the firms declined Templeton Investments, Goldman Sachs Group Inc. and possibly even BlackRock Inc. or State Street Corp. Spokesmen at the firms declined comment.
And although GE has announced that it wants to keep the buyer universe to money managers, industry experts said private equity firms — including the Carlyle Group LP and KKR & Co. — might be interested in buying GEAM. A spokeswoman at Carlyle declined to comment while a spokeswoman for KKR did not respond to a request for comment.
Mr. Linehan said several firms have already expressed interest in GEAM, but would not name names.
“It's not a long list,” said Domonkos L. Koltai, a partner and co-founder of investment bank PL Advisors, New York. “No more than 10 firms could have the ability and desire for the proposed deal.”
However, any potential sale might be more complicated than it seems at first glance.
GEAM had $115 billion in total assets under management as of June 30, but about 85% was managed for GE benefit plans, and other affiliated GE assets, such as the Elfun Funds, a mutual fund family for GE employees, retirees and their family members.
Mr. Linehan wouldn't comment on any potential commitment from GE on maintaining a relationship with the money manager after a sale because that would be part of the negotiations. But retaining that relationship is something potential buyers will need to consider, in addition to the usual concerns of third-party client departures after a manager changes ownership.
Gary Harbin, executive secretary of the $17.9 billion Kentucky Teachers' Retirement System, Frankfort, said in a phone interview that the system's board intends to meet with GEAM — which manages an $800 million large-cap growth portfolio for the plan — and assess whether to stay with the manager.
“Every time there's a change in management there's a cause for concern,” said Mr. Harbin. “We'll make a decision after we complete our due diligence. If we stay with them, we'll monitor them very closely.”
That said, he added Kentucky Teachers officials are “very happy with our relationship with GEAM. They've done a great job.”
Culture also could prove an issue, as any potential buyer would have to integrate employees from a business where asset growth has been a lower priority than is the case with most asset managers, Mr. Koltai said.