General Electric to sell GE Capital's restaurant franchise loan portfolio

28 Jun 2016

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General Electric Co (GE) yesterday struck a deal to sell a bulk of GE Capital's restaurant franchise loan portfolio in the US to three regional banks in separate deals, as  part of the industrial group's plan to exit from the finance sector.

GE said that the deals represent ending net investment of about $1.4 billion as of the first quarter and are expected to release about $200 million of capital for the company.

The transactions are expected to close in the third quarter this year.

Under these deals, each buyer will acquire assets based on the regional headquarters location of the respective borrowers.

First Horizon National Corporation, a Tennessee-based bank with assets of approximately $27 billion, will acquire assets in the Southwest and Southeast.

Wintrust Financial Corporation, an Illinois-based bank with approximately $23 billion in assets, will acquire assets in the Midwest and part of the West, and New York-based Sterling National Bank with $13 billion in assets, will acquire assets in the East.

GE said that the remainder of assets in the West will be sold separately.

GE announced in April last year that it would sell off most of its financial arm GE Capital and focus on its core industrial business. GE also said that it will retain the financing verticals that relate directly to GE's industrial businesses.

At the time of the announcement, GE Capital had a $500 billion lending business.

Since the announcement, GE Capital has signed agreements for approximately $180 billion and has closed approximately $156 billion of those.

In total, GE plans to sell approximately $200 billion of GE Capital businesses worldwide and expects to be complete with the process by the end of 2016.

GE Capital believes it is on track to pay about $35 billion as dividends to GE under this plan, subject to regulatory approval.

''As we continue to execute on our strategy to sell GE Capital's assets that are not linked to GE, the sale of these restaurant financing assets represents our last major U.S. platform transaction,'' said GE Capital chairman and CEO Keith Sherin.

''We are pleased to reach separate agreements with three strong buyers that will be able to continue to serve our customers and restaurant brands as they continue to grow,'' he added.

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