GE Finance sold in record-setting deal
In one of the largest transactions seen in Australia, a consortium of private equity firm KKR & Co, alternative investment manager Varde Partners and Deutsche Bank has agreed to buy GE Capital’s Australian and New Zealand consumer lending arm for $8.2 billion, the “enterprise value” of the business.
The actual amount paid for the business has not been disclosed.
The trio said they were attracted to a business with more than 3 million customers and a long-standing relationship with many of the big retailers in Australia and New Zealand.
“GE Capital is one of the most respected providers of consumer finance in Australasia,” KKR Australia director Ed Bostock said. “They are led by a strong management team with an outstanding track record of partnering with the leading retailers.”
General Electric Co has been shrinking its financial services arm GE Capital Corp. after it weighed down the group during the 2008-09 credit crisis.
GE has also disposed of its appliances unit, real estate holdings and a stake in NBCUniversal. The streamlined GE Capital finance unit is focusing on funding purchases of heavy equipment, lend money to mid-sized companies and to invest in commercial real estate.
“This transaction allows us to focus on our strategy to be the world’s premier infrastructure technology company with a speciality commercial financial services business,” GE Australia and New Zealand president and chief executive Geoff Culbert said.
“We will continue to work with our customers in key industries including oil and gas, energy, healthcare, aviation and mining.”
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GE Capital Australia and New Zealand chief executive Duncan Berry said the company would continue to build its commercial mid-market lending portfolio and leasing businesses in the region.
GE Capital consumer business managing director Rachel Cobb said it would “grow our consumer finance business” as it seeks to work with existing customers and partners.
Negotiations for the transaction have continued for several months with others such as Wesfarmers and Macquarie Bank involved in competing consortiums vying to acquire the business.
The deal is the second multibillion-dollar transaction in Australia in a matter of weeks, coming in the wake of Japan Post agreeing to acquire Toll Holdings, the transport and logistics group, for $6.5 billion. Japan Post is to go public later this year.
GE’s Australian finance arm offers a range of services and products spanning personal loans, credit cards and also interest-free retail finance. It is a partner to several large retailers in providing their consumer finance loans. All of these products and services will remain under the company’s new ownership.
GE Australia said that after the sale, it will continue to provide commercial loans along with lending to the so-called mid-market, and also provide commercial lease financing.