GE Inks Sale of $30B Specialty Finance to Wells

FAIRFIELD, CT and SAN FRANCISCO—GE on Tuesday announced its largest transaction to date in its sell-off of its GE Capital operations, agreeing to sell GE Capital's $30-billion global Commercial Distribution Finance, North American Vendor Finance and Corporate Finance platforms to Wells Fargo. Covering sectors that include construction and retail along with logistics and equipment leasing, the deal encompasses about $32 billion of assets and 3,000 employees worldwide. Terms were not disclosed.

Calling it “a critical step in our efforts to reduce the size of GE Capital,” Keith Sherin, GE Capital's chairman and CEO, says his group has signed more than $126 billion in transactions in the past six months, “which is over 60% of our overall plan.” GE Capital, he adds, is “on track to become less than 10% of GE's earnings as the company transitions to a more focused digital industrial company.”

At San Francisco-based Wells Fargo, Tim Sloan, head of Wells' Wholesale Banking platform, says the deal represents “an outstanding opportunity for Wells Fargo to deepen relationships and strengthen our presence in key commercial lending markets. GE Capital's businesses are industry leaders with proven business models and capabilities backed by exceptionally talented and experienced teams.

Sloan adds that "these advantages, in addition to portfolios that are diversified geographically and by industry, will allow Wells Fargo to continue to grow our business in order to better serve the needs of new and existing Wholesale Banking customers.” This past April, Wells and the Blackstone Group acquired the bulk of GE Capital's commercial real estate assets, including both properties and loans.

Although 90% of the loan and lease portfolios that Wells is acquiring are US- and Canada-based, CDF provides customers in 60 countries with inventory financing to fund the flow of finished durable goods from manufacturers to dealers. It operates globally in six core industries: marine, recreational vehicles, motorsports, outdoor products, technology, electronics and appliances. Vendor Finance provides private label and co-branded programs for OEMs, dealers and end users across four core industries in the US and Canada: office imaging, construction, material handling and technology.

The transaction, which is expected to close in the first quarter of 2016, also includes essentially all of GE Capital Corporate Finance's portfolio of senior secured loans and leases for middle market companies across the US and Canada, as well as some employees. Corporate Finance has 10 specialized equipment lending and leasing verticals, with particular expertise in food and beverage, forestry, metals, restructuring and retail.

Goldman Sachs and Credit Suisse provided financial advice to GE and Weil Gotshal & Manges LLP provided legal advice. For the buyer, Wells Fargo Securities served as financial advisor and Mayer Brown served as legal advisor.