General Electric Company (NYSE:GE) has signed an agreement to sell a portfolio of first lien mortgage loans from its UK Home Lending business, representing aggregate ending net investment (ENI) of approximately US$5.8 billion, to an investment consortium made up of opportunistic funds managed by Blackstone, TPG Special Situations Partners (TSSP), and CarVal Investors. The loans have a face value, or customer servicing balance of US$5.9/£3.8 billion. The transaction is expected to close in December 2015; terms were not disclosed.
“This transaction represents the sale of almost all our remaining UK mortgage business, which successfully provided financing for UK home owners,” said Keith Sherin, GE Capital chairman and CEO. “We began this year with around US$13 billion of ENI and when this transaction closes, we will have approximately US$0.4 billion of ENI remaining in our UK mortgage business. This is an important step as we continue to execute on our plan to sell most of the assets of GE Capital.”
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 current market conditions are favorable to pursue disposition of these assets. GE will retain the financing verticals that relate to GE’s industrial businesses.
When completed, this transaction will contribute approximately US$0.4 billion of capital to the overall target of approximately US$35 billion of dividends expected to be paid to GE under this plan (subject to regulatory approval). In total, the combined sales of the UK Home Lending portfolios, including this transaction, will contribute nearly US$1 billion of capital to the target. With the transaction, the total ENI for 2015 announced sales is about US$136 billion.
“We are pleased with the progress we are making to reach and close agreements for our businesses and assets. The speed and value we have achieved is a testament to the hard work of our GE Capital teams around the world,” concluded Sherin. (Original Source)
Shares of General Electric closed last Friday at $30.66. GE has a 1-year high of $30.99 and a 1-year low of $19.37. The stock’s 50-day moving average is $29.20 and its 200-day moving average is $26.75.
On the ratings front, General Electric has been the subject of a number of recent research reports. In a report issued on November 16, Deutsche Bank analyst John G. Inch maintained a Hold rating on GE, with a price target of $28, which implies a downside of 8.7% from current levels. Separately, on November 11, William Blair’s Nicholas Heymann maintained a Buy rating on the stock and has a price target of $32.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, John G. Inch and Nicholas Heymann have a total average return of 12.5% and 4.3% respectively. Inch has a success rate of 80.0% and is ranked #587 out of 3858 analysts, while Heymann has a success rate of 53.8% and is ranked #1760.
Overall, 2 research analysts have assigned a Hold rating and 7 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $31.25 which is 1.9% above where the stock closed last Friday.