GE Capital to sell consumer lending unit to PE consortium for $6.3bn

May 2015 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

GE Capital has agreed to sell its Australia and New Zealand consumer lending business to a private equity consortium consisting of global alternative investment firm Värde Partners, leading global investment firm KKR, and Deutsche Bank in a deal valued at $6.3bn.

GE Capital is a leading financial services provider offering a range of services and products including personal loans, credit cards and interest free retail finance.

Since the 2008-2009 credit crisis, General Electric (GE) has been gradually shrinking its financial services arm, GE Capital, with its appliances unit, real estate holdings and a stake in NBC Universal all divested. The streamlined GE Capital finance unit is now focusing on funding purchases of heavy equipment, lending money to mid-sized companies and investing in commercial real estate.

“We are delighted to have signed this agreement with a well-respected consortium of businesses. Consumer finance has been a great business for GE and is well positioned for further growth,” said Duncan Berry, chief executive of GE Capital Australia & New Zealand. “We remain committed to our growth strategy for GE Capital commercial finance in the region and will continue to build our mid-market lending portfolio and leasing businesses here.”

An equally committed Rachel Cobb, managing director of GE Capital’s consumer business, said: “This is an exciting opportunity for us to grow our consumer finance business further and we will continue to provide best-in-class service and solutions for our customers and partners.”

And GE president and CEO in Australia & New Zealand, Geoff Culbert, commented: “GE has a strong platform for growth in our industrial businesses in Australia & New Zealand. “This transaction allows us to focus on our strategy to be the world’s premier infrastructure technology company with a specialty commercial financial services business. We will continue to work with our customers in key industries including oil and gas, energy, healthcare, aviation and mining.”

Following the transaction, all of these products and services will remain under GE Capital’s new ownership.

In a joint statement, Värde Partners, KKR and Deutsche Bank said they were attracted to a business with more than three million customers and a longstanding relationship with many of the major retailers in both Australia and New Zealand. “GE Capital is one the most respected providers of consumer finance in Australasia,” said Ed Bostock, director of KKR Australia. “They are led by a strong management team with an outstanding track record of partnering with leading retailers. We are delighted to have the opportunity to partner with Värde Partners and Deutsche Bank to support both existing and new customers and product growth in the years to come.”

George Hicks, a founding partner and co-CEO of Värde Partners, commented: “Värde Partners believes this partnership will provide a platform for growth in the dynamic consumer finance market in Australia and New Zealand. It is a natural extension of our deep expertise in specialty consumer finance and a great fit for us.”

Deutsche Bank’s Australia and New Zealand chief executive, James McMurdo, said: “Deutsche Bank is delighted to be partnering with KKR and Värde in the acquisition of this high quality, market-leading business in Australia and New Zealand.”

Advisers to GE Capital are Credit Suisse and Morgan Stanley. Advisers to the acquiring consortium – KKR, Deutsche Bank and Värde Partners – are Bank of America Merrill Lynch, Moelis & Company and Citi.

The transaction is subject to customary regulatory approvals and further terms of the transaction are not being disclosed.

Fraser Tennant