The GE logo (Photo : REUTERS/Vincent Kessler)
General Electric Co. has sold its consumer lending business of GE Capital in Australia and New Zealand to an investors' group comprising of Värde Partners, KKR & Co. and Deutsche Bank AG for a whopping enterprise value of USD 6.3 billion. This deal is one of the biggest in Asia Pacific this year and stands at AUD 8.2 billion.
Due to this deal, the investor group is going o get a customer base of more than three million from GE Capital in Australia and New Zealand. GE Capital's consumer-lending business is mainly into personal loans and credit cards.
The GE capital's financial business unit also used to provide interest-free finance for local retail partners' products, including housewares and electrical retailer Harvey Norman. The commercial financing unit, which provides loans to mid-size businesses, will stay active with GE Capital.
GE has been continually slashing its financial services business that imperilled the company during the 2008 financial crisis. Last year, the company sold assets worth USD 7.7 billion, according to data compiled by Bloomberg.
The Wall Street Journal reports that GE has faced continuous investor pressure to concentrate on its industrial operations like manufacturing jet engines, power turbines and CT scanners. The idea is to be lean and more profitable, and the company is determined to reduce its presence in banking and financial operations worldwide.
At an investor conference in February, GE Chief Financial Officer Jeffrey Bornstein said, "We will continue to look at the balance of the portfolio. A lot of this is going to play out in the next couple of years. We're focused on being small."
Regarding the deal, George Hicks, co-CEO of Minneapolis-based Värde Partners said, "It is a natural extension of our deep expertise in specialty consumer finance and a great fit for us."
There was an upbeat environment among investors to buy the GE Capital business. Apollo Global Management LLC, TPG Capital and Macquarie Group Ltd. also offered final bids to buy the GE business.
Evan Lucas, a market analyst at Melbourne-based IG Ltd said, "GE's financial services business here is formidable and a lot of people were interested in it."
