GE leasing business sell off continues

GE’s plan to relinquish much of its commercial lending and leasing business continues, with the company announced the sale of its Japanese portfolio, including Capital Finance, Fleet Service and Vendor Finance, to Sumitomo Mitsui Finance and Leasing (SMFL), a member of Sumitomo Mitsui Financial Group.

The sale price is approximately $4.8 billion. The transaction includes employees of the business and represents aggregate GE ending net investment (ENI) of approximately $4.6 billion.

“We continue to make quick progress on the sale of our international assets and are pleased to sell this business to a company that is committed to growth for our customers and employees,” said Keith Sherin, GE Capital chairman and CEO (pictured above). “This is our second transaction with the broader Sumitomo Mitsui Financial Group and we were happy to work with them again,” he added.

Since announcing the strategy on April 10, 2015 to sell most GE Capital assets, GE has signed agreements for $149 billion of the approximately $200 billion in ending net investment (ENI) that it plans to sell through this process. The sales and exit plan are expected to be largely complete by the end of 2016.

GE will retain the financing businesses that directly relate to GE’s industrial businesses, including GE Capital Aviation Services, GE Capital Energy Financial Services and GE Capital Healthcare Equipment Finance. This process will result in about $35 billion of capital returned to GE.

“When we announced our new strategy in April, we set an ambitious goal of completing $90 billion of GE Capital asset sales by year-end. Given strong market interest and phenomenal execution by our teams around the world, we were able to revise and surpass that target today, reaching $101 billion in closed transactions and ENI reduction,” Sherin reported.

GEAS flying high

Separately, GE Capital Aviation Services (GECAS), the commercial aircraft leasing and financing arm of GE, has announced it signed an agreement with Virgin America, to lease 10 new Airbus A321neo aircraft to expand the carrier’s fleet.

The first aircraft is scheduled for delivery in Q1 2017 and the remainder will deliver in 2017 and 2018. All 10 aircraft are part of GECAS’ existing orderbook with Airbus.

“We have been a partner with Virgin America since their founding and we’re thrilled they turned to GECAS to help them expand their fleet with new, more efficient aircraft under lease,” said Norman Liu, GECAS president and CEO.

GECAS owns or services a fleet of over 2,150 aircraft (made up of around 1,840 fixed wing/ 310 rotary wing) in operation or on order, plus provides loans collateralized on an additional 400 aircraft. The company serves over 270 customers in over 75 countries from a network of 25 offices.