NEW YORK CITY -- As it seeks to emphasize its industrial business over lending, General Electric (IW 500/6) announced plans Friday to spin off its North American retail finance business.
GE will issue up to 20% of the equity in the retail finance unit in an initial public offering in 2014 as "a first step in staged exit from that business," according to a GE securities filing.
GE said it currently plans to complete the exit from the North American retail finance business in 2015 by exchanging interest in the new venture for GE common shares. The company may also decide to exit by selling remaining shares in the new venture.
GE chief executive Jeffrey Immelt has discussed a goal of reducing the company's reliance on the share of lending earnings to overall profits from 45% to 30%.
Over the last year, GE shares have underperformed compared with pure-play industrial equities like United Technologies and Honeywell International.
GE said the spinoff should enable it to reduce shares to 9.0-9.5 billion from the current 10.1 billion, according to a GE Capital presentation to investors Friday.
"GE Capital will remain a competitively advantaged, speciality finance business that represents 30 percent of GE's earnings and should grow in line with the rest of GE," GE Capital said.
The North American retail division includes credit cards issued by stores and is part of the consumer segment of GE Capital. GE Capital's other divisions include real estate and energy finance.
Copyright Agence France-Presse, 2013
