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GE Capital Passes $100B Threshold of Transactions Closed; Signings Total $149B

December 10, 2015, 08:13 AM
Filed Under: Industry News

GE announced that it has completed more than $100 billion in previously announced portfolio and business unit sales as part of its strategy to significantly reduce the size of GE Capital and apply for de-designation as a systemically important financial institution (SIFI).

Since announcing the strategy on April 10, 2015 to sell most GE Capital assets, GE has signed agreements for $149 billion of the approximately $200 billion in ending net investment (ENI) that it plans to sell through this process. The sales and exit plan are expected to be largely complete by the end of 2016. GE will retain the financing businesses that directly relate to GE’s industrial businesses, including GE Capital Aviation Services, GE Capital Energy Financial Services and GE Capital Healthcare Equipment Finance. This process will result in about $35 billion of capital returned to GE (subject to regulatory approval where required).

In addition, last month, GE also completed the split-off of Synchrony Financial through a share exchange. The separation reduces the systemic footprint of GE Capital, reduced ENI by $65 billion and reduced the outstanding float of GE common stock by about 6.6%, the equivalent of approximately $20.4 billion in GE stock buyback.

With the completion of the split off and progress to-date on the GE Capital Exit Plan, GE is on track to return more than $90 billion to investors from 2015 to 2018 with more than 90% of earnings coming from high-return industrial businesses.

“When we announced our new strategy in April, we set an ambitious goal of completing $90 billion of GE Capital asset sales by year-end. Given strong market interest and phenomenal execution by our teams around the world, we were able to revise and surpass that target today, reaching $101 billion in closed transactions and ENI reduction,” said Keith Sherin, GE Capital chairman and CEO.

To pass the $100 billion threshold, GE completed the U.S. and Canadian portion of the previously announced sale of its fixed-wing Corporate Aircraft financing portfolio in the Americas to Global Jet Capital, representing about $2.1 billion in ENI. The sale of the remaining aircraft finance assets, made up of accounts in Mexico which comprise less than 10% of the total Americas portfolio, is expected to close in January. The transaction will contribute $0.3 billion of capital to the $35 billion target.

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