General Electric Co. has held talks with “a broad geographic spectrum” of sovereign wealth funds as part of the effort to sell the bulk of its financial business, said Jeff Bornstein, senior vice president and chief financial officer.
While declining to give specific names, Mr. Bornstein said a number of funds have expressed interest along with banks, private equity firms, hedge funds and insurance companies. GE hopes to complete the majority of GE Capital disposals by the end of 2016, he said.
“We're tracking every expression of interest inbound,” Mr. Bornstein said Friday in a telephone interview. “We have multiple, multiple pages of names. I think this is going to be very competitive.”
Discussions with sovereign buyers show the scope of potential demand for GE's divestiture of about $200 billion in commercial finance, consumer lending and real estate assets. Large U.S. banks, including U.S. Bancorp and J.P. Morgan Chase, have said they would look into what is shaping up as a frenzy of interest from financial firms.
Having sovereign buyers involved could speed GE's sales process because they might be able to avoid U.S. rules for domestic bidders, said Scott Davis, a Barclays analyst. GE opted to sell most of the finance business in part to shed its label as a systemically important financial institution, a tag that also could trip up U.S. buyers.
“Large banks are going to have some of the same restrictions that GE had,” Mr. Davis said in an interview. “What's appealing about the thought of a sovereign buyer coming in is you wouldn't have the regulatory challenges. Basically you get the keys to the car and drive away.”
Sovereign funds might be interested in GE's $130 billion commercial lending and leasing portfolio, which provides financing largely to middle-market businesses, Mr. Davis said. The unit has “a diversified portfolio, it already has its own sales force and collection people,” he said.
GE said April 10 that it will sell the bulk of its lending unit in a sweeping move that accelerates CEO Jeffrey Immelt's plan to shrink the GE Capital unit that destabilized the parent during the 2008-'09 financial crisis.
