Written by Jasir Jawaid
General Electric Capital Corp.'s announced divestiture plan is a "very, very good thing" for Ares Management LP, said co-founder and President Michael Arougheti.
The topic has generated significant chatter during recent earnings conference calls. Both CIT Group Inc. and Starwood Property Trust Inc. have expressed interest in acquiring some of the assets, and, more recently, Fifth Street Finance Corp. said GE Capital's exit would translate to more business for the company.
Speaking during a May 12 earnings call, Arougheti said he viewed the GE Capital announcement as part of a continuing trend of banks and regulated institutions exiting attractive markets due to regulatory burdens. He expects the GE Capital
exit to create opportunities within direct lending and in Ares' commercial real estate lending businesses in the U.S. and Europe.
"We think it will drive growth in our commercial finance platform," he added.
Arougheti expects that in many of the markets where his company used to bump into GE Capital it will see fees go up, margins widen and certain structural changes work their way through to accommodate nonbank and non-GE players.
A recent rumor suggested that Ares was interested in acquiring a General Electric Co. U.S. unit that lends to private equity firms. GE Capital unit GE Antares Capital comprises the bulk of the subsidiary.
This article was published by S&P Global Market Intelligence on the S&P Capital IQ Pro platform.
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