LPs

GE Antares Chief: Tech, industrial sectors to drive deal volume this year

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  • Mid-market lender expects “another very active year”
  • Tech companies are able to sustain more leverage
  • Growth in auto production will drive industrial sector

“I expect it to be another very active year,” said Martin, who leads GE Capital’s middle-market unit from its Chicago office. GE Antares provided roughly $27 billion of financing to companies backed by private equity sponsors in 2014, according to a recent press release. “From a lending standpoint, there remains abundant liquidity in debt capital markets,” Martin said.

The technology sector accounted for more than $122 billion of M&A activity in 2014, up 29.3 percent from the previous year, according to recent report from Mergermarket. As more technology companies develop into cash-generating businesses, they should be able to take on additional leverage, possibly as potential private equity targets, Martin said.

In the industrial sector, “auto production has continued to increase, so you could see auto parts (businesses) and companies in that sector” continue to grow, he said.

Overall transaction volume will also benefit from the near-record level of available private equity investment capital, known as dry powder, Martin said. Limited partners committed approximately $200 billion to U.S. private equity firms in 2014, more than any year since the global financial crisis, according to Buyouts data. Pitchbook estimates that U.S. firms have amassed roughly $535 billion of dry powder as of mid-2014, just off the record $545 billion held in 2013.

Low interest rates and abundant liquidity in debt capital markets are also expected to drive deal flow.

Slowing growth in Europe and Asia, along with questions about the sustainability of recent gains in the U.S. recovery, will likely temper the Federal Reserve’s plans to raise interest rates in the immediate future, Martin said.

“There’s not a lot of reason to be pushing upward in any meaningful way,” Martin said, adding that he expects any gradual increase in interest rates to occur in the latter half of the year. “So long as that’s the case, I don’t see activity in our space slowing down at all.”

GE Antares maintains offices in Atlanta, Chicago, Los Angeles, Toronto, New York and San Francisco. In 2014, the lender provided financing for deals made by private equity sponsors such as The Jordan Company, The Pritzker Group and Vestar Capital Partners.

Contact info

John Martin, CEO, GE Antares: john.g.martin@ge.com