General Electric Co. has put virtually all of its U.S. commercial loan businesses on the market after hiring banks to unload $20 billion of assets in its health-care, railcar and franchise finance divisions, according to people with knowledge of the matter.
JPMorgan Chase & Co. is working to sell Healthcare Financial Services, a middle-market lender with about $10 billion in assets, said the people, who asked not to be identified because the details are private. Deutsche Bank AG is finding a buyer for GE’s railcar lessor, and Barclays Plc is selling the franchise lender, the people said. JPMorgan is overseeing all the sales as global coordinator, one person said.
With the sales process under way for almost all of the financial assets targeted for disposal, GE is accelerating its plan to unload the bulk of its GE Capital business and refocus on industrial manufacturing. Chief Executive Officer Jeffrey Immelt said last month the divestiture of about $200 billion of GE Capital’s operations would be done by 2016, a year earlier than the plan announced in April.
Seth Martin, a spokesman for GE, declined to comment, as did a representative for JPMorgan. Spokesmen for Deutsche Bank and Barclays didn’t return calls seeking comment.
The three lending divisions now being sold account for about $20 billion of GE’s commercial lending and leasing portfolio. GE has also begun marketing another $40 billion of its U.S. commercial loan assets, people familiar with the matter said last week.
GE’s railcar finance unit leases freight and tank cars and offers loans and maintenance services. The company has weighed selling the business at least twice since 2008. It ended an auction for the division in 2011 after concluding that the lessor was faring well as freight shipments recovered.
The franchise finance division lends to middle-market operators in the restaurant and hospitality industries. The business has more than 2,000 customers, supporting chains from companies such as Denny’s Corp. and Burger King Worldwide Inc.
The Wall Street Journal previously reported that GE started the sale of the health-care lending unit.
Immelt has been moving GE away from lending since GE Capital put the parent company at risk during the 2008-09 financial crisis. That shift accelerated with the April 10 agreement to sell most of GE’s real estate to Blackstone Group LP and Wells Fargo & Co. for $23 billion.
GE could announce $30 billion in asset sales by the end of June because of heavy interest from buyers, Immelt said last month. The Fairfield, Connecticut-based company has received more than 450 inquiries from prospective purchasers as it looks to sell off about 40 subfranchises, GE Capital CEO Keith Sherin said at an industry conference.
The company also has sought to sell its U.S. private-equity lending business quickly to prevent an exodus of employees nervous about the change. GE is in talks with Canada Pension Plan Investment Board for the unit, people familiar with the matter said this week.
Apollo Global Management, Ares Management and Guggenheim Securities also made bids, the people said.
GE fell 1 percent to $27.26 at the close in New York. The shares’ 7.9 percent advance this year beat the 1.8 percent gain in the Standard & Poor’s 500 Index.
Credit default swaps tied to GE Capital rose 1 basis point to 42.5 basis points, according to data provider CMA, which is owned by McGraw Hill Financial Inc. and compiles prices quoted by dealers in the privately negotiated market. The contracts decline as investor confidence improves. During the financial crisis, the swaps surged past 1,000 basis points, a level usually associated with distressed companies.