GE Files IPO for North America Finance Unit to Cut Risks

GE Files IPO for North America Finance Unit to Cut Risks
Andel Ngan, AFP/Getty ImagesGeneral Electric CEO Jeffrey Immelt
By Thomas Black

General Electric filed for an initial public offering of its North American consumer lending business as part of Chief Executive Officer Jeffrey Immelt's effort to reduce credit risks.

GE (GE) has previously said as much as 20 percent of the unit, which it has renamed Synchrony Financial, will be sold in an IPO, and in a second step the remaining shares will be distributed to GE stockholders in a tax-free transaction.

Thursday, GE said it expects to complete the IPO later this year. In a filing with the U.S. Securities and Exchange Commission, GE registered to sell $100 million of shares. That amount is a placeholder used to calculate fees and may change.

"When you look at this business they're spinning off, there's little justification for why they should be in that business in the first place," said Gary Flam, a fund manager in Los Angeles with Bel Air Investment Advisors, which owns 818,678 GE shares, according to data compiled by Bloomberg.

Divesting the finance arm, whose products include store credit cards for companies such as Walmart Stores (WMT) and J.C. Penney (JCP),
bolsters Immelt's bid to boost the share of earnings from units making industrial goods such as medical scanners. He has been slimming GE Capital since credit markets froze in the 2008-09 financial crisis, imperiling the parent company.

GE, based in Fairfield, Conn., said Thursday it's targeting completion of its exit through a split-off transaction in 2015. It may also decide to leave the business by selling or otherwise distributing or disposing of all or a portion of its remaining interest, it said.

GE rose 0.9 percent to $25.99 at 9:48 a.m. in New York. The shares had dropped 8.1 percent this year before today, compared with a 1.1 percent gain in the Standard & Poor's 500 Index (^GPSC).

The joint book-running managers for the IPO are Goldman Sachs Group (GS), JPMorgan Chase (JPM), Citigroup (C), Morgan Stanley (MS), Barclays (BCS), Bank of America (BAC), Credit Suisse Group (CS) and Deutsche Bank (DB).

GE will apply to list the shares on the New York Stock Exchange under the symbol SYF.


General Electric Could IPO Consumer Lending Business in 2014

More From Bloomberg:

Increase your money and finance knowledge from home

Understanding Stock Market Indexes

What does it mean when people say "the market is up 2%"?

View Course »

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

Add a Comment

*0 / 3000 Character Maximum

Comments

Filter by:
jdykbpl45

When is AOL going to fix and stop changing its on line portfolio access?

IS IT TIME TO DROP AOL????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

THINK SO.

March 13 2014 at 11:28 AM Report abuse +2 rate up rate down Reply