May 23 General Electric Co is considering spinning off parts of its financial arm, GE Capital, through an initial public offering as part of its plan to reduce the size of the business, Chief Executive Jeffrey Immelt said.
"The capital markets are very receptive to IPOs," Immelt said at the Electrical Products Group Conference in Florida on Wednesday. "I think you basically have as good a setting as you could possibly have."
General Electric said on Monday that GE Capital would pay $6.5 billion in dividends to its parent in 2013.
"I think, particularly in financial services, putting things for sale with the assumption that a bank would buy it has been a fool's journey," Immelt said. "So the only way you have been able to think about this is by thinking about IPOs."
Immelt said GE planned to reduce GE Capital's ending net investment (ENI), a balance sheet measure, to between $300 billion and $350 billion by the end of 2014.
The measure includes assets that GE needs to fund but strips out things like accounts payable and changes in currency rates. It stood at $419 billion as of Dec. 31, 2012.
"That is going to create excess cash in GE Capital, and we are going to use that excess cash to buy back stock," he said.
"We would like to get our share count down to 9 billion to 9.5 billion shares by the end of 2015," he said.
GE shares were down 1.5 percent before the bell. They closed at $23.86 on the New York Stock Exchange on Wednesday.