General Electric Withdraws From Banking in Speculated $11 Bln Deal

GE has put $200 bln of their financial assets on sale, with American wealth management giants KKR and Apollo among speculated buyers.

Kristian Rouz — The American multinational equity firm KKR & Co, along with their colleagues of Apollo Global Management, are allegedly seeking to buyout the banking branch of General Electric (GE), an arm wothy $11 bln in assets, in two separate bids.

Whilst the GE were intending to sell about $200 bln worth of their financial assets in April to focus on machinery and furnace manufacturing, they are currently selling their financial divisions separately, albeit within several large-scale deals.

Anonymous sources said KKR & Co. L.P. (formerly known as Kohlberg Kravis Roberts & Co.) and Apollo Global Management, both the New York-based equity and investment banking firms, are intending to acquire the GE's financial branch in its entirety, as reported by Bloomberg. No official confirmations have yet been received from any of the involved parties, with KKR abstaining from immediately commenting the rumoured deal, whilst Apollo declined to comment, and GE "unavailable" for comment.

According to the available information, KKR and Apollo expressed their interest to purchase the entire GE Capital Commercial Distribution Finance, a unit involved in providing credit services to manufacturers and retailers. The ongoing negotiations are private, and GE is expected to choose the buyer by the end of September.

GE is currently undergoing a process of refocusing on industrial production of heavy-duty machinery and electric furnace like jet engines and power turbines, as provided by Chief Executive Officer Jeffrey Immelt's latest strategy of business development.

A similar deal was closed Thursday when GE transportation finance division was sold to Bank of Montreal.

The entire financial arm, however, is a larger division, and as GE is seeking a single buyer for a multi-billion deal, the selection process might take some time. The businesses for sale include inventory finance, an equipment-leasing arm and a lender to mid-size companies, all of which provide financial assistance to moving manufactured goods like electronic furnace from factory gate to retail chains.

GE are selling their $200 bln worth financial assets not least in order to be excluded from the US government's list of the "too big to fail" financial enterprises. As part of Immelt's strategy, GE is intending to increase their output of gas turbines and oil extraction equipment, including drilling rigs and oil pumps, seeing better profits in the shale oil boom rather than finance, where stricter administrative regulation and tighter monetary policy are promising less returns in the future.