- General Electric‘s lending arm, GE Capital, has to fill a $US20 billion funding gap through ways such as selling assets, Goldman Sachs says.
- CEO Larry Culp told CNBC Monday that he would cut the company’s leverage by selling assets.
- On Friday, GE Capital sold a $US1.5 billion healthcare-equipment finance portfolio to US lender TIAA Bank.
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General Electric‘s lending arm – GE Capital – has a huge funding hole that it needs to fill through ways such as selling assets, Goldman Sachs says.
With the company’s liability sitting above industry average level, Ritchie said he remains on the sidelines of the stock with a price target of $US9 – 12.5% above its current price.
“We don’t see GE as inexpensive given its leverage profile and tail risk associated with GE Capital,” he said.
GE management has recently been speeding up efforts to reduce debt and increase investor confidence. Larry Culp, who was appointed CEO on October 1, Monday told CNBC that his company has “no higher priority right now than bringing those leverage levels down,” and that he intends to do so by selling assets.
GE Capital is “too big” and has too much debt, Culp said.
“We’ve been materially shrinking that business down $US25 billion this year,” he added. “That work will continue. We’ve got a number of great assets there and it is important that people remember. We’ve got assets that match the liabilities.”
The latest step in the company’s planned $US25 billion reduction in GE Capital came on Friday, when it announced the sale of a $US1.5 billion healthcare equipment finance portfolio to US lender TIAA Bank.
And the parent company is also shedding of business units and investments. On Wednesday, GE sped up efforts to sell a $US4 billion stake in the oilfield-services provider Baker Hughes.
GE was down 55% this year.
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