GE sells health care lending business for $9 billion

A General Electric facility in Schenectady, N.Y.

Fairfield-based GE will sell $8.5 billion of its health care-related loans and its Healthcare Financial Services U.S. lending business to Capital One for approximately $9 billion, the company announced yesterday. It also signed an agreement to sell its HFS real estate equity investments to another buyer for approximately $600 million.

“This announcement is the next step in GE”™s transformation to a more focused industrial company,” said Keith Sherin, GE Capital chairman and CEO, in the company”™s statement.

In April the company announced it would sell most of its Norwalk-based GE Capital assets to focus on its high-value industrial businesses.

GE Capital”™s Healthcare Financial Services provides financing to U.S. health care companies, sponsors, investors and developers across various health care sectors including senior housing, hospitals, medical offices, outpatient services, pharmaceuticals and medical devices.

GE Capital 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.

Sherin said Capitol One is committed to expanding the health care lending business. Darren Alcus, president and CEO of HFS, will join Capital One. Capital One also will retain the HFS management team and employees, GE said.

“This is a strategic investment in a specialty industry segment that we have been building out for the past several years,” said Michael Slocum, president of Capital One”™s Commercial Bank, in a company statement. “This addition will catapult us to a leading market position in providing financial services to the healthcare sector.”

When completed, the transaction, which represents about $8.4 billion of ending net investment ($8.5 billion of assets), will contribute approximately $1.5 billion of capital to the overall target of approximately $35 billion of dividends expected to GE under this plan (subject to regulatory approval). With this transaction, the total for announced sales is approximately $78 billion.

“We are on track to reduce our ending net investment by $100 billion by the end of 2015 and expect to be substantially done with our exit strategy by the end of 2016,” Sherin said.