General Electric Company (NYSE:GE) has been trying to shrink its credit arm for the last many months. Its latest decision to sell one of the financial service units in Australia worth $6.3 billion is a clear cut evidence of the same. The company has revealed that it’s following its promises effectively.
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Experts have been giving mixed responses about this step of General Electric. Amongst many such analysts, Peter Sorrentino of Asset Advisors Inc. states that it’s a great step taken by the company. It reveals how much committed General Electric is towards their ways of deploying and investing capital. According to him, it’s good for the company as well as for the shareholders. Sorrentino is the portfolio manager at Asset Advisors, which owns a significant part of General Electric’s shares.
The announcement of this sale deal came out on Sunday when General Electric Company (NYSE:GE) announced that it had decided to sell its consumer lending operations based in New Zealand and Australia to an investor group. As per the reports, this group consisted KKR & Co., Värde Partners, and Deutsche Bank AG. The total value of this is said to be around A$8.2 billion or $6.3 billion. The consumer lending unit was active in personal loans and credit cards.
Jeffrey Immelt, Chief Executive Officer, has been taking strategic steps to decrease General Electric’s over dependence on GE Capital since the financial crisis of 2008-09. Immelt wants the company to focus more on various industrial businesses such as medical imaging equipments, aircraft engines, etc. Investors value such businesses more than the normal financial business.
The primary objective of the company is to make sure that three-quarters of its total earnings come from industrial business while the rest one quarter comes from GE Capital. In 2014, industrial businesses accounted for 58%, but the company wants to enhance this share in the current year.