GE to sell European private equity financing unit to Sumitomo Mitsui Bank for $2.2 bn

01 Jul 2015

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General Electric Co (GE) yesterday struck a deal to sell its European private equity financing business to a unit of Japan's Sumitomo Mitsui Banking Corp (SMBC) for about $2.2 billion as part of the US industrial giant's restructuring plan.

The move comes just two days after the Fairfield, Connecticut–based company agreed to sell the rest of its vehicle-fleet businesses in the US and Mexico as well as in Australia and New Zealand to Canada's Element Financial for $6.98 billion. (See: General Capital to sell most of fleet management ops to Canada's Element Financial for $6.98 bn)

GE said that its unit GE Capital will retain its $1 billion investment in the European Senior Secured Loan Programme and European Loan Programme, both joint ventures between affiliates of GE Capital and affiliates of Ares Capital.

When completed, the portfolio, which represents about $2.2 billion of ENI, will contribute approximately $0.4 billion of capital to the overall target of approximately $35 billion of dividends expected to GE under this plan.

GE's European Sponsor Finance business is a leading provider of sponsor finance for European mid-market, private-equity backed transactions.

''As GE Capital continues to execute on its strategy to sell most of the assets of GE Capital, this agreement with SMBCE shows our European businesses are of great interest to financial services firms around the world,'' said Keith Sherin, GE Capital chairman and CEO. ''We had many indications of interest in this business and are pleased to partner with SMBCE on the sale of this franchise,'' he added.

GE is embarking on a strategy to focus on its high-value industrial businesses and is selling most GE Capital assets, but retain the financing ''verticals'' that relate to GE's industrial businesses.

Since the April, GE has signed agreements to sell about $23 billion, including the European Sponsor Finance deal announced today with ENI of $2.2 billion. Other sales during the quarter include $1.2 billion of loans in our UK Home Lending portfolio.

In addition, it has already sold GE Capital's Budapest Bank to the Hungarian State and GE Capital Real Estate.

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