CANBERRA: General Electric Co. is starting a process to sell its US$5 billion Australia commercial-lending operation, according to people familiar with the situation, dismantling another key piece of GE Capital in Asia.
The process is in the early stages and comes as the U.S. conglomerate is also preparing its commercial-lending operations in Japan for a sale. In March, GE struck a deal to sell its Australia and New Zealand consumer-lending business to a consortium including KKR & Co. for an enterprise value of US$6.3 billion, including debt.
The string of Asia asset sales, which will fetch GE billions of dollars, follows a pledge by Chief Executive Jeff Immelt to refocus the U.S. conglomerate toward industrial businesses ranging from aircraft engines to wind turbines.
Mr. Immelt wants to sell or spin off the bulk of GE’s US$500 billion in global financial assets, aiming to use the proceeds to return US$50 billion to shareholders.
GE hopes that investors will give the company a richer valuation if it goes back to its industrial roots and delivers steadier earnings without the volatility generated by GE Capital’s operations. During the financial crisis, GE required a cash infusion from the U.S. Treasury to keep it afloat. GE was designated for sharper scrutiny as a systemically important nonbank financial company.
GE’s Australia commercial-lending operations have an asset value of approximately US$5 billion and it is working with its adviser to prepare the business for a sale to potential bidders, according to people familiar with the situation.
Private-equity investors are the most likely bidders for the operations and the way an ultimate bid is financed will play a key role in the final amount of equity bidders would have to pay for the business, they said.
