* Files $100 million placeholder with the U.S. SEC
* Unit to list on NYSE under symbol "SYF"
* Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley are
* Unit seeks $20 bln to $25 bln valuation-Bloomberg
By Aman Shah
March 13 General Electric Co's credit
card unit filed for an initial public offering on Thursday, the
first step in the conglomerate's long-awaited plan to exit
retail finance and reduce its dependence on its financing arm.
GE announced plans in November to spin off the North
American retail finance business into a publicly traded company,
which bankers estimated could be worth roughly $16 billion to
GE will look to raise as much as $3.5 billion from the IPO
and seek a valuation of $20 billion to $25 billion for the unit,
Bloomberg reported, citing people with knowledge of the matter.
A spokesman for the company declined to comment on the
GE has been reducing its reliance on GE Capital, its
financing arm, which at one point accounted for almost half of
the company's profit. The unit's rising funding costs during the
2008 financial crisis nearly sank the entire company.
With the spinout of the retail lending business, GE hopes to
focus on its industrial divisions and better compete with rivals
such as Honeywell International Inc and United
Technologies Corp, which have smaller financing arms.
"We see the exit from North America retail finance as a net
positive for GE over time, provided the price is right and
capital is deployed wisely," Sanford C. Bernstein analyst Steven
Winoker wrote in a note.
The unit, which makes credit card loans to consumers in the
United States and Canada, will operate under the name Synchrony
Financial, GE said in a statement.
Synchrony will use proceeds from the offering to repay debt,
increase capital and invest in liquid assets, according to the
IPO filing. ()
GE said in November that it would float up to 20 percent of
the credit card business through the IPO, with a target to
complete the exit in 2015.
The business traces its roots to 1932 when GE began
providing financing to consumers to help meet demand for its
It is now the largest provider of private label credit cards
in the United States based on purchase volume and receivables,
according to the filing.
The cards are offered through major retailers and brands
including Wal-Mart Stores Inc, Lowe's Cos Inc
and Ethan Allen Interiors Inc.
The business had 62 million active accounts, financed about
$94 billion of sales and reported net earnings of $2 billion for
2013, according to the filing.
"(The IPO) will be a museum piece for the institutions that
invest in it," said John Fitzgibbon, founder of IPO-tracking
Investors will view the IPO favorably, given the business is
well-established and profitable, Fitzgibbon said.
Spanish lender Banco Santander SA took its U.S.
consumer-finance arm Santander USA Holding Inc public in
January, with shares rising as much as 10 percent in their
Goldman Sachs & Co, JP Morgan, Citigroup and Morgan Stanley
are lead underwriters for the IPO, according to the filing.
Synchrony, which filed a $100 million placeholder with the
regulator on Thursday, said it expects to list its stock under
the symbol "SYF" on the New York Stock Exchange.
The filing did not reveal how many shares its parent would
sell and the price.
LAST MAJOR ACTION
GE Capital posted revenue of about $44 billion last year. It
was named a systemically risky financial institution last July
by the U.S. Financial Stability Oversight Council.
The designation, commonly known as "Too Big To Fail", in
effect guaranteed more regulatory oversight of GE Capital.
GE has said the spinoff would be the "last major action" in
its efforts to reduce GE Capital's share of the company's profit
to 30 percent.
"We think that provided management keeps their share buyback
promises, investors will favor the higher industrial earnings
weighting over time," Bernstein's Winoker wrote in the note.
The amount of money a company says it plans to raise in its
first IPO filings is used to calculate registration fees. The
final size of the IPO could be different.
GE shares were down 1.2 percent at $25.44 in afternoon
trading on the New York Stock Exchange.