Aug 30 General Electric Co plans to spin
off the U.S. consumer lending operations of its finance arm GE
Capital, as the conglomerate moves to focus on its core
industrial operations, a person familiar with the matter said.
GE Capital nearly sank the whole company during the
2007-2009 financial crisis, and the company has been trying to
shrink the division's portfolio ever since.
An initial public offering of the consumer lending division,
which issues store credit cards for 55 million Americans, could
come early next year, but its size has not yet been determined,
according to the Wall Street Journal. ()
"A spin-off of GE's consumer business would be a significant
positive for the company, as it would expedite its shift to
industrial earnings solidly outgrowing GE Capital," said William
Blair & Co analyst Nicholas Heymann, in a note.
GE declined to comment.
A sale might help GE Capital escape some of the most
burdensome new regulations after it was named a systemically
important financial institution by the U.S. financial risk
council in July.
The council reviews the status of these institutions - which
are so large their demise could threaten the safety of the
entire financial system - annually, taking into account "any
material changes" to the business.
The consumer division earned $3.24 billion last year and had
assets of $139 billion. GE Capital's total assets at the end of
2012 were $539 billion.
Chief Executive Jeffrey Immelt at a conference in May said
the company aimed to trim GE Capital's assets to $300 billion to
$350 billion by the end of 2014 through "staged exits" of some
Bankers from JPMorgan Chase & Co and Goldman Sachs
Group Inc are working on a possible public offering,
while alternatives include smaller spin-offs or asset sales, the
Wall Street Journal said. Goldman Sachs and JPMorgan declined to
William Blair analysts said the consumer division could
potentially be valued at $35 billion, or about $3 to $4 per GE