General Electric Co. granted to sell a majority stake in a solar-power enterprise to BlackRock Inc., giving the investment giant footing in a growing market as the feeble manufacturer shifts its focus elsewhere.
A fund managed by BlackRock’s Real Assets unit will own 80% of Distributed Solar Growth, a new firm created from GE Solar, the companies mentioned Wednesday in a statement. Financial terms weren’t disclosed.
The deal furthers GE’s streamlining as Chief Executive Officer Larry Culp seeks to rescue the conglomerate by narrowing focus round aviation, gas power and wind energy. The Boston-based firm is using amalgamations to exit the oil and locomotive markets, and GE has mentioned it’s “evaluating strategic options” for its venture-capital operations.
GE Solar, a consulting enterprise with about 60 employees, has been incubated inside GE since 2012. The unit, which doesn’t make solar panels, focuses on “solar and storage options for the industrial and public sectors.” GE had explored photo voltaic-panel manufacturing; however, sold its technology to First Solar Inc. in 2013.
GE fell 1.5% to $10.23 at 10:42 a.m. in New York, whereas BlackRock slid 1.5% to $470.13.
BlackRock’s Real Assets unit, which has more than $50 billion in client commitments, began its renewable-power platform in 2012. The GE deal comes as investors start prioritizing a solar section that was as soon as seen as riskier than developments for utilities or homeowners: projects for commercial and industrial customers.
Part of the impetus is cash; as smaller solar farms offer returns that may be more than 2% higher than big projects.
It’s also a matter of availability and supply. Large institutional buyers have dominated latest auctions for utility-scale developments, crowding out different would-be buyers. Moreover, states, including California, have committed to rid their grids of emissions, encouraging more renewables developments.