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GE said to hire banks to start sale on US$20b assets

Thursday, June 4, 2015 - 12:02
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General Electric Co has put virtually all of its US commercial loan businesses on the market after hiring banks to unload US$20 billion of assets in its health-care, railcar and franchise finance divisions, according to people with knowledge of the matter.

[NEW YORK] General Electric Co has put virtually all of its US commercial loan businesses on the market after hiring banks to unload US$20 billion of assets in its health-care, railcar and franchise finance divisions, according to people with knowledge of the matter.

GE is working with JPMorgan Chase & Co to sell Healthcare Financial Services, a middle-market lender with about US$10 billion in assets, said the people, who asked not to be identified because the matter is private. GE has engaged Deutsche Bank AG to find a buyer for the railcar lessor and Barclays Plc to sell the franchise lender, the people said. JPMorgan is overseeing all the sales as global coordinator, one person said.

With the sales process under way for almost all of the financial assets targeted for disposal, GE is accelerating its plan to unload the bulk of its GE Capital business and refocus on industrial manufacturing. Chief Executive Officer Jeffrey Immelt said last month the divestiture of about US$200 billion of GE Capital's operations would be done by 2016, a year earlier than the plan announced in April.

Seth Martin, a spokesman for GE, declined to comment, as did a representative for JPMorgan.

Spokesmen for Deutsche Bank and Barclays didn't return calls seeking comment made outside normal business hours.

The three lending divisions now being sold account for about US$20 billion of GE's commercial lending and leasing portfolio. GE has also begun marketing another US$40 billion of its US commercial loan assets, people familiar with the matter said last week.

Freight Cars GE's railcar finance unit leases freight and tank cars and offers loans and maintenance services. The company has weighed selling the business at least twice since 2008.

It ended an auction for the division in 2011 after concluding that the lessor was faring well as freight shipments recovered.

The franchise finance division lends to middle-market operators in the restaurant and hospitality industries. The business has more than 2,000 customers, supporting chains from companies such as Denny's Corp. and Burger King Worldwide Inc.

The Wall Street Journal previously reported that GE started the sale of the health-care lending unit.

Immelt has been moving GE away from lending since GE Capital put the parent company at risk during the 2008-09 financial crisis. That shift accelerated with the April 10 agreement to sell most of GE's real estate to Blackstone Group LP and Wells Fargo & Co for US$23 billion.

Heavy Interest GE could announce US$30 billion in asset sales by the end of June because of heavy interest from buyers, Immelt said last month. The Fairfield, Connecticut-based company has received more than 450 inquiries from prospective purchasers as it looks to sell off about 40 subfranchises, GE Capital CEO Keith Sherin said at an industry conference.

The company also has sought to sell its US private-equity lending business quickly to prevent an exodus of employees nervous about the change. GE is in talks with Canada Pension Plan Investment Board for the unit, people familiar with the matter said this week. Apollo Global Management, Ares Management and Guggenheim Securities also made bids, the people said.

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