General Electric has reached an agreement to sell its private equity lending unit to Canada Pension Plan Investment Board for $12 billion. The deal is part of GE's transition out of banking as it sells off most of its GE Capital division.
Residential mortgage REITs Two Harbors Investment and PennyMac Financial Services are launching commercial mortgage divisions as they eye further growth and diversification opportunities. Two Harbors Investment has hired three executives to start a CRE division, and PennyMac Financial Services has formed a division to focus on small-balance multifamily and nonresidential loans.
The Cape Wind offshore wind project in Massachusetts' Nantucket Sound has chosen Bank of Tokyo-Mitsubishi UFJ as the lead commercial bank for the project's debt financing. Ted Roosevelt IV, managing director of Barclays, which acts as financial adviser to the project, said the deal with the Japanese bank was a "significant step toward achieving financial close." Cape Wind expects to finalize the financing for the 468-megawatt offshore wind project and begin construction by the end of the year.
Goldman Sachs is planning to capitalize on a hole in the markets by using its new $10 billion fund to invest in senior loans that back leveraged buyouts. Another Goldman fund, which is twice as large, invests in mezzanine loans. The investment bank can use the two funds, which will operate under its private-equity division, to finance major deals by itself.
Berkshire Hathaway CEO Warren Buffett, famous for investing in troubled industries, says the firm's manufactured-housing division, Clayton Homes, has already made investments in the subprime business. Where Buffett goes, others will likely follow. Pacific Investment Management Co., Zurich Financial Services and others have already started looking for bargain-priced assets to capitalize on.