UPDATE 3-GE to sell European private equity financing unit to SMBC

30 Jun 2015 | Author: | No comments yet »

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TOKYO (Reuters) – General Electric Co said it would sell its European private equity financing business to a unit of Japan’s Sumitomo Mitsui Banking Corp (SMBC) for about $2.2 billion as the U.S. conglomerate sheds financial assets amid a restructuring. GE will retain its $1 billion investment in the European Senior Secured Loan Programme and European Loan Programme, both joint ventures between affiliates of GE Capital and affiliates of Ares Capital, the U.S. company said in a statement today. In 2012, SMFG acquired an aircraft leasing company from Royal Bank of Scotland Group for $7.3 billion and this year, Mizuho Financial Group Inc <8411.T> agreed to buy the U.S. and Canadian loan portfolio of RBS for $3 billion. (http://reut.rs/1g6apGT) GE Capital’s Japanese commercial finance operations are part of this wider sale process, with one person familiar with the matter valuing them at around $5 billion. (Additional reporting by Sagarika Jaisinghani and Rama Venkat Raman in Bengaluru; Writing by Ritsuko Ando; Editing by Edwina Gibbs, Miral Fahmy and Kirti Pandey)

Banks in the world’s third-largest economy are looking abroad for growth as a declining population and shrinking loan margins hamper profit prospects at home. “This is an effective way to expand overseas business,” said Yoshinobu Yamada, an analyst at Deutsche Bank AG in Tokyo, prior to the deal being officially announced. “Sumitomo Mitsui can count on the spreads from lending to private equity. Chief Executive Officer Jeffrey Immelt is refocusing on industrial operations, making products such as jet engines, gas turbines and medical scanners.

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