General Electric Co., working to reduce dependence on its finance unit, is in advanced talks to sell assets in the $9 billion vehicle fleet-management business to Element Financial Corp., people familiar with the matter said.
No deal has been reached yet with Toronto-based Element, and the discussions may still fall apart, said the people, who asked not to be identified because the matter is not public. GE hopes to come to terms on a sale of the operations by the end of the quarter, one person said.
GE leases and manages 1.4 million autos and trucks, mostly in the U.S., for mid-sized and large companies including Hewlett-Packard Co. through GE Capital Fleet Services. Unloading all or part of that business would further the plan that GE announced last month to dispose of the bulk of its finance arm.
Chief Executive Officer Jeffrey Immelt intends to sell or spin off about $200 billion of commercial and consumer lending platforms while re-emphasizing GE’s manufacturing operations. While GE will retain aircraft-leasing and other financing businesses that support industrial units, the vehicle-fleet division is seen as severable, the people said.
Element, which is focused on leasing operations in North America, jumped 4.7 percent to C$19.10 at the close in Toronto. The gain was Element’s biggest since April 10 and extended the stock’s 2015 rally to 35 percent. GE fell 0.6 percent to $27.52 in New York as major U.S. stock indexes declined.
John Sadler, an Element spokesman, declined to comment, as did Seth Martin, a spokesman for Fairfield, Connecticut-based GE.
Element raised C$2.5 billion ($2 billion) in equity in a secondary sale last week to fund undisclosed “future acquisitions.” The company bought GE Capital’s Canadian fleet business in 2013 for $560 million and entered into a Canadian-U.S. cross-border partnership. In 2014, Element expanded by purchasing the North American fleet management business of PHH Corp., PHH Arval, for $1.4 billion.
GE Capital Fleet Services operates globally. GE’s ending net investment in the business -- a balance-sheet gauge that excludes non-interest-bearing liabilities and cash -- was $9 billion as of December 2014, according an April 10 presentation to investors.
Immelt said last week that GE expects to reach agreements to sell as much as $30 billion of GE Capital assets by the end of the quarter. By year’s end, disposals will total about $100 billion, and the process should be largely done by 2016, ahead of a target of 2017, Immelt said at a conference.
GE also is in talks to sell its private equity sponsor business, which has drawn interest from companies such as Apollo Global Management and Ares Management LP, people familiar with the matter said last month.