Lockheed Martin Corp., the largest global defense company, is exploring a sale of $600 million in alternative assets to reduce exposure to private equity funds, people with knowledge of the matter said.
The portfolio is held by the Lockheed Martin Investment Management Co., a subsidiary of Lockheed that manages employees' retirement plans, said the people, who asked not to be identified because the information is private. Lockheed is working with an adviser, and a deal might be completed by the end of the year, the people said.
Lockheed Martin Investment Management had more than $36 billion in assets under management at the end of 2014, according to the company's annual report, of which $4.3 billion was alternative assets. About $2.9 billion was in private equity funds, the report shows. Lockheed has a target of no more than 15% of its portfolio being invested in private equity.
Lockheed is planning several divestitures after agreeing to acquire helicopter maker Sikorsky for $9 billion this year. In October, CEO Marillyn Hewson said the Bethesda, Md.-based company is exploring a sale, spinoff or Reverse Morris Trust transaction of its slower-growing information technology and services businesses by 2016.
Standard & Poor's downgraded Lockheed's debt rating Monday, citing its “expectation of a significant deteriorating in Lockheed's forecasted credit metrics” as the company continues returning excess cash to shareholders despite the debt-financed acquisition of Sikorsky, said Chris Mooney, an S&P credit analyst, in a statement.
The government businesses to be shed represent about $5.5 billion of total revenue, offsetting some of the sales gained from Sikorsky, the largest U.S. military helicopter maker. Lockheed will probably use some of the proceeds for debt reduction, Mr. Mooney said.
A spokesman for Lockheed Martin declined to comment.