General Electric's GE Capital Sells Portfolio To TIAA Bank

Pursuant to the decision to shrink its business, General Electric Company’s (NYSE:GE) financial services unit — GE Capital — announced that it divested $1.5-billion portfolio of its Healthcare Equipment Finance (“HEF”) business to TIAA Bank.

It’s worth mentioning here that this news came in a couple of days after General Electric proceeded with selling parts of its stake in Baker Hughes, a GE company (NYSE:GE) in a private repurchase transaction as well as through secondary offering of shares to the public.

TIAA Bank is a unit of Retail & Institutional Financial Services business of TIAA. TIAA Bank’s lending and banking services are primarily extended to commercial, institutional and consumer clients.

Details of the Transaction

As disclosed, the portfolio sold included loans and leases related to healthcare equipment — including respiratory, imaging, ultrasound, monitoring, lab and surgical. These loans and leases were extended to imaging centers, physician practices (roughly 3,600), diagnostics and hospitals (roughly 1,100) operating in the United States.

Moreover, GE Capital and TIAA Bank entered a financing alliance, valid for five years, for GE Healthcare’s U.S. customers. Further, in 2019, GE Healthcare will have the added advantage of GE Healthcare Equipment Finance’s salesforce, management and infrastructure.

General Electric’s Plan Related to GE Capital

In June 2018, General Electric announced that it was planning to restructure its business portfolio in a bid to become a high-tech industrial company — focused on Aviation, Power and Renewable Energy.

Along with measures like exiting oil and gas businesses, and selling of healthcare assets; the company maintained its intention of shrinking GE Capital business. The company is aiming $25-billion sales in GE Capital’s finance assets (mainly energy and industrial) by 2020 and assuming capital contribution of $3 billion in 2019. Moreover, it is working on lowering its exposure to the insurance business.

In October 2018, GE Capital agreed to sell roughly $1 billion worth of equity investments of its Energy Financial Services business — 20 investments in midstream energy infrastructure, renewable energy and contracted natural gas-fired generation assets — to funds managed by associates of Apollo Global Management, LLC (NYSE:APO) — Apollo Funds.

Zacks Rank and Stock to Consider

General Electric currently has a market capitalization of $69.8 billion and it carries a Zacks Rank #5 (Strong Sell). This conglomerate’s share price has decreased 34.8% in the past three months compared with 8.4% decline recorded by the industry.



On the other hand, conglomerate Macquarie Infrastructure Company (NYSE:MIC) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last 60 days, earnings estimates on Macquarie Infrastructure remained unchanged for 2018. Further, the company delivered average positive earnings surprise of 3.85% for the last four quarters.

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Macquarie Infrastructure Company (MIC): Free Stock Analysis Report

General Electric Company (GE): Free Stock Analysis Report

Apollo Global Management, LLC (APO): Free Stock Analysis Report

Baker Hughes, a GE company (BHGE): Free Stock Analysis Report

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