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General Electric Arm to Divest Project Finance Debt Business

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General Electric Arm to Divest Project Finance Debt Business

General Electric's (GE) business arm -- GE Capital -- to divest its Energy Financial Services Project Finance Debt Business to Starwood, in line with the portfolio-restructuring efforts of the former.

General Electric Company’s GE business arm — GE Capital — recently inked a deal to divest its ProjectFinance Debt Business (“Project Finance Debt Business”) to Starwood Property Trust, Inc. STWD, for roughly $2.6 billion. The to-be-divested business is a part of GE Capital’s Energy Financial Services division.

Project Finance Debt Business is complementary to the Starwood Property Trust platform that has a huge lending experience across diversified geographies and assets. The to-be-divested Project Finance Debt Business includes senior secured debt in renewable energy, thermal power and midstream assets, mostly in the United States. As per the divestment deal, a team of GE Capital’s existing workforce (including around 20 investment professionals) will be transferred to Starwood Property Trust.

The divestment deal is currently subject to customary conditions and will likely close by third-quarter 2018.

In a bid to become a high-tech industrial company, General Electric is currently restructuring its entire business portfolio. In sync with this, the company intends to shrink exposure of its GE Capital business over time. The aforementioned spin-off will reduce the size of GE Capital’s existing asset base and thereby, make it more focused and smaller, going forward.

General Electric is poised to grow on the back of its strategic restructuring moves, strong international presence and robust end-market sales.

However, over the past month, shares of this Zacks Rank #3 (Hold) company has lost 7.9%, as against 2.2% growth registered by the industry.

Key Picks

Two better-ranked stocks in the same space are listed below:

Federal Signal Corporation FSS sports a Zacks Rank #1 (Strong Buy). The company pulled off an average positive earnings surprise of 22.48% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carlisle Companies Incorporated CSL carries a Zacks Rank #2 (Buy). The company generated an average positive earnings surprise of 12.85% over the trailing four quarters.

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General Electric Company (GE) : Free Stock Analysis Report
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STARWOOD PROPERTY TRUST, INC. (STWD) : Free Stock Analysis Report
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