When General Electric (GE) announced yesterday that it had agreed to sell its mid-market lending business — GE Antares — to the Canada Pension Plan Investment Board for $12 billion, the sale price might have felt a bit light. That’s probably because the deal does not include around 40% of Antares assets that are housed in a joint venture with Ares Management (ARES).
The Ares/Antares joint venture was formed in late 2007 as a senior secured loan program that is structured with Ares having the right of partner transfer refusal. That means Ares now will enter negotiations with CPPIB to see if the two sides can work together — a source says that direct talks didn’t open until the formal sale agreement was signed on Monday night — and, if not, the most likely outcome would be that the program gets wound down.
The same goes for a much smaller joint venture with private equity firm Line Star Funds.
In both cases, GE will continue to operate the programs until the larger Antares sale to CPPIB closes sometime in the third quarter.
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