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GE Closes Sale of Aussie & Kiwi Commercial Lending Assets

Industrial goods manufacturer General Electric Company GE has recently completed the divesture of GE Capital’s Commercial Lending and Leasing assets in Australia and New Zealand. The assets were sold to Bain Capital Credit, a leading global credit specialist with approximately $30.1 billion in assets under management.

The transaction included about $1.2 billion in ending net investment (ENI) for General Electric. Since Apr 2015 till date, GE Capital has inked sale agreements worth approximately $166 billion in ENI, of which it has already completed deals worth $150 billion. The transactions are in conformity with the corporate strategy of building a manufacturing-based entity with emphasis on big-ticket items such as aviation engines, drilling machines, generators, medical equipment and scanners. With these restructuring initiatives, General Electric expects operating earnings from the industrial business to comprise over 90% of its total operating earnings by 2018, up from 58% in 2014.

General Electric is actively pursuing massive restructuring initiatives in order to create a simpler and nimbler firm. From a classic conglomerate with diversified business interests in financial services, media, industrial and technology-based operations, the company is pruning its operating portfolio to focus on core manufacturing businesses with a digital edge.

During first-quarter 2016, General Electric sold its appliance business to Haier Group, a Chinese multinational consumer electronics manufacturing firm. The transaction, scheduled to be completed by the second quarter, unlocked incremental value by allocating more resources to high-growth core industrial businesses.

Other notable divestures during the quarter included the sale of Asset Management business to State Street Corporation for approximately $485 million, GE Capital’s Franchise Finance U.S. hotel business to Western Alliance Bank, and Canadian Franchise Finance business to an undisclosed buyer.

Also during the quarter, General Electric created GE Aviation Digital to bring digital expertise across the entire Aviation business under one platform. The new digital division increased productivity and minimized down time through effective utilization of cloud computing and analytics to augment revenues for the company.

In addition, the company launched a Digital Alliance Program, which is dedicated to building a digital industrial ecosystem across global systems integrators, independent software vendors, telecommunications service providers and technology providers. This industry-pioneering program will likely help General Electric to gain a competitive edge over peers, grow its customer base and generate higher revenues by expanding its IT portfolio.

We remain encouraged with the restructuring endeavors of this Zacks Rank #3 (Hold) stock. Some notable companies in the industry include Crane Co. CR, Carlisle Companies Inc. CSL and CLARCOR Inc. CLC, each carrying a Zacks Rank #2 (Buy).

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GENL ELECTRIC (GE): Free Stock Analysis Report
 
CLARCOR INC (CLC): Free Stock Analysis Report
 
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CRANE CO (CR): Free Stock Analysis Report
 
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