By Anthony Capkun
April 10, 2015 – “This is a major step in our strategy to focus GE around its competitive advantages,” said GE chair and CEO Jeff Immelt (photo), referring to the news that GE will create “a simpler, more valuable company” by reducing the size of its financial businesses through the sale of most GE Capital assets, and focusing on continued investment and growth in its industrial businesses.
“These businesses are leaders in technology, the Industrial Internet and advanced manufacturing. They are well-positioned in growth markets and are delivering superior customer outcomes, while achieving higher margins. They will be paired with a smaller GE Capital, whose businesses are aligned with GE’s industrial growth,” continued Immelt.
GE and its board have determined “that market conditions are favourable” for pursuing the disposition of most GE Capital assets over the next 24 months (except the financing verticals that relate to GE’s industrial businesses).
“GE Capital’s businesses are excellent, and this is a great market for selling financial assets. Our people are world-class. We are confident these businesses will thrive elsewhere,” said GE Capital chair and CEO Keith Sherin.
As part of the execution of this new plan, GE will sell the bulk of the assets of GE Capital Real Estate to funds managed by Blackstone. Wells Fargo will acquire a portion of the performing loans at closing. The company also has letters of intent with other buyers for an additional $4 billion of commercial real estate assets, says GE. In total, these transactions are valued at about $26.5 billion.
Under the plan, GE expects more than 90% of its earnings will be generated by its industrial businesses by 2018, up from 58% in 2014.
“We are completing another definitive and important move to reshape GE for the future,” concluded Immelt. “Our best days are ahead.”