Capital One buys GE healthcare lending business

Capital One has bought GE’s healthcare lending business in a deal worth around $9 billion as GE goes ahead with its previously announced strategy to move out of the asset finance business and focus on its core industrial and manufacturing activities.

GE Capital’s Healthcare Financial Services (HFS) provides financing to US healthcare companies, sponsors, investors and developers across various healthcare sectors including senior housing, hospitals, medical offices, outpatient services, pharmaceuticals and medical devices. Darren Alcus, president and CEO of HFS, will join Capital One. Capital One also will retain the HFS management team and employees.

“We’re pleased to sell HFS to a company that is committed to expanding the business,” said Keith Sherin, GE Capital chairman and CEO (pictured above). “Our customers, sponsors and HFS employees will benefit from the synergies of combining Capital One’s existing healthcare lending businesses with the expertise, relationships and experience of our highly-regarded HFS team.”

Disposal strategy

“This transaction is another example of the value generated by GE Capital’s strong businesses and exceptional teams as we continue to demonstrate speed and execute on our strategy to sell most of the assets of GE Capital,” Sherin added. “We are on track to reduce our ending net investment (ENI) by $100 billion by the end of 2015 and expect to be substantially done with our exit strategy by the end of 2016.”

As well as selling $8.5 billion of healthcare-related loans and its Healthcare Financial Services (HFS) US lending business to Capital One for approximately $9 billion, separately, GE has signed an agreement with another buyer to sell approximately $600 million of HFS real estate equity investments.

As previously announced, GE is embarking on a strategy to focus on its high-value industrial businesses and is selling most GE Capital assets. GE and its board of directors have determined that market conditions are favorable to pursue disposition of these assets. With this transaction, the total for announced sales so far is approximately $78 billion.

GE Capital has said it will retain the financing “verticals” that relate to GE’s industrial businesses, including a unit that provides healthcare equipment financing to GE Healthcare customers and others.

The transaction is subject to customary regulatory and other approvals and is expected to close in the fourth quarter of 2015.