Source: Bloomberg Business
General Electric Co. is running ahead of schedule on the plan to shed the bulk of its lending unit, with about $100 billion of assets to be unloaded this year.
Chief Executive Officer Jeffrey Immelt said he expects to reach deals this quarter to sell as much as $30 billion of financial businesses as the company shrinks GE Capital. The goal of divesting about $200 billion of assets will be largely met next year, beating a previous target of 2017, he said.
“This is a great time to be selling,” Immelt said Wednesday in a presentation at the Electrical Products Group conference in Longboat Key, Florida. “There’s so much demand. It’s hard to not see this being essentially done by next year.”
Finishing early would hasten Immelt’s drive to return GE to its industrial roots by eliminating most of GE Capital, which destabilized the parent company during the financial crisis. GE said last month that it will sell the bulk of the commercial and consumer lending businesses while retaining those units that support the manufacturing operations, including aircraft leasing.
Shares Rebound
GE reversed an early slide, rising 1.1 percent to $27.64 at the close in New York. The stock has gained 7.4 percent since April 9, the last trading day before the Fairfield, Connecticut-based company announced the strategy shift.
The company is spinning off its North American credit card business, known as Synchrony Financial, and reached a deal last month with Wells Fargo & Co. and Blackstone Group LP to sell real estate in a deal valued at about $23 billion. GE had announced a target of $90 billion in asset sales this year.
GE is working with Citigroup Inc. to sell the unit that lends to private-equity firms, generating interest from companies such as Apollo Global Management and Ares Management LP, people familiar with the matter said last month.
The GE Capital plan was driven in part by the company’s aim to shrink the division to below the threshold to be considered a systemically important financial institution. Immelt said GE would proceed with plans to apply next year for de-designation.
GE has received more than 450 inquiries from interested bidders for the finance assets, Immelt said.
The CEO also said he is confident the company will win approval to buy the energy assets of France’s Alstom SA.
European Union regulators have until Aug. 21 to decide on the 12.4 billion euro ($13.8 billion) deal, which was announced last year. While GE would consider offering concessions concerning intellectual property if necessary to win the EU’s blessing, the company will not sell any assets related to service revenue, Immelt said.
He reaffirmed GE’s 2015 outlook, saying strength in the jet-engine unit is countering a drag from the oil and gas division.