By Lewis Krauskopf
(Reuters) - General Electric Co (N:GE) said on Thursday it would seek to sell its asset management arm to an investment management firm, as the U.S. conglomerate further sharpens its focus on industrial products.
GE Asset Management had $115 billion in assets under management as of June 30, according to GE, and manages retirement plans for the vast majority of GE's 136,000 U.S. employees as well as assets for outside institutional investors including third-party retirement plans.
The plan to unload the asset management arm comes after GE announced in April it would seek to sell some $200 billion of its GE Capital assets as it moves away from financial services and focuses more on manufacturing jet engines, power turbines and other big-ticket industrial equipment. GE Asset Management is separate from GE Capital.
The company said proceeds from the transaction would be deposited into the GE Pension Trust, increasing trust assets used to pay GE pension plan benefits.
GE said in its annual filing that the GE Pension Plan was underfunded by $15.8 billion at the end of last year, compared to $4.7 billion as of the end of 2013.
GE will retain responsibilities as plan sponsor following any sale, and is appointing an independent fiduciary to review the transaction.
GE Chief Executive Jeff Immelt said there had been "significant interest" over time from investment firms in acquiring the business.
"As we continue to transform GE to focus on our industrial core, now is the right time to explore such a sale," Immelt said in a statement.
Assets in GE's principal pension plans earned 5.9 percent last year, according to the company's annual report. Average annual returns through last year were 9 percent over five years, 5.9 percent over 10 years and 8.4 percent over 25 years. The company said in the annual report it assumed a long-term expected return of 7.5 percent.
The average return for the top 100 U.S. corporate pension plans was 10.9 percent in 2014, according to benefit consulting firm Milliman.
According to Morningstar, a group of 17 funds GE manages for outside investors and amounting to about $17 billion in assets ranked on average in the top 35 percent compared with similar funds, based on the past 10 years' performance.
GE Asset Management has about 300 employees, most in Stamford, Connecticut, where the unit is based.
GE said it hired Credit Suisse (SIX:CSGN) as its investment banker in the transaction.