General Electric

Share On Facebook
share on Linkedin

The business for sale comprises several divisions, which include a commercial lending arm and automobile, office and construction machinery equipment leasing businesses. It is the second acquisition of a GE business by SMFG this year, the first being a European buyout-financing business. SMFG is the second largest financial group in Japan after Mitsubishi UFJ (TYO: 8306, initial buy ¥918.90). Both companies have been seeking to grow outside of Japan.

© Image copyright epsos

Demand for GE Capital assets has been so strong that the parent is running well ahead of schedule in divesting the $200 billion or so of GE Capital financing assets it announced in April.

This is so GE can focus more on its industrial goods businesses such as jet engines and huge turbines where management feel the company has more of an edge. It will be dramatic transformation of the company and back in April the company was forecasting that the transactions would allow it to potentially distribute a whopping $90 billion plus to shareholders over the 2015 – 2018 period as highlighted in the following graphic:

In the wake of the GFC, being a big bank (and GE Capital was essentially one of the biggest in the United States) has got much tougher. As part of the move to exit GE Capital, management are working to lose its SIFI (systemically important financial institution) designation and therefore not face such tough regulatory oversight.

GE will also be hoping to benefit from an expansion in its price to earnings multiple, with industrials generally carrying much higher multiples than financials.

Earlier this year famed activist Nelson Peltz’s Trian Fund become a major shareholder in GE with a view that the market was underestimating what GE will be worth in its new guise. The shares have been re-rated upwards this year, appreciating more than 20% year to date.

For nearly 15 years, Fat Prophets remains UK’s premier equity research and funds management company. Register today to receive our special report Bargain Hunting, and a no obligation free trial to our popular email service

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

Do you want to write for our Newspaper? Get in touch:

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20220809 13:57:25