General Electric to sell lending unit for $12bn

General Electric of the United States is "going fast" with its plans to sell most of its financial services operations and is on target to achieve the prices it had hoped, the chief executive of the conglomerate's finance division has said.

Keith Sherin, chief executive of GE Capital, was speaking as GE agreed to sell its US buyout lending unit to Canada's biggest pension fund in a $12 billion deal, the latest move in the conglomerate's effort to shed most of its financial services operations to focus on manufacturing.

He said it would be returning $2.5 billion to its parent from the sale, part of the total of $35 billion GE plans to raise from the disposal programme.

It is the largest disposal for GE since it agreed the sale of $26.5 billion worth of property assets to Blackstone and Wells Fargo in April. That deal was announced at the same time as GE launched its radical plan to offload about three-quarters of GE Capital, its financial services division. The assets it plans to sell have been valued at about $200 billion.

Prioritised

Mr Sherin said other businesses that could be sold soon included acquisition finance in Europe and healthcare financial services. The units that were being prioritised for sale first were generally lending operations that needed certainty, because “customers want to know who they’re borrowing from”, he said.

GE expects to have about half of its planned sales, with assets of about $100 billion, concluded this year, and most of the remainder next year.

The main business sold in the deal announced by GE yesterday is Antares Capital, which lends to "middle market" companies backed by private equity. Canada Pension Plan Investment Board plans to retain the team and the brand of Antares, including its managing partners David Brackett and John Martin.

– (Copyright The Financial Times Limited 2015)