Japan’s Sumitomo Mitsui Banking Corp. has acquired the European private equity finance unit of General Electric Company (NYSE:GE). The Japanese firm acquired the unit for $2.2 billion.
General Electric announced the sale on Tuesday thus marking the company’s latest efforts in backing out of the banking sector. The European private equity finance unit acted as a financier for acquisitions within the private sector, thus classifying itself as a sponsor unit. The acquisition deal is expected to come to a completion within the third quarter of the current year.
GE also revealed that it will maintain a $1 billion investment in the European Loan Program and the European Senior Secured Loan Programme. There were a few other firms that had submitted their bid for the acquisition including Ares Management LP, and Apollo Global Management LLC. However, the Japanese bank emerged victorious over the competition.
The European Unit deal comes shortly after the company announced a deal to divest its vehicle fleet financing businesses in New Zealand, U.S., Mexico and Australia for $6.9 billion. The company also announced a different deal for its European fleet business. The two deals were announced on Monday. The numerous deals are part of the company’s efforts towards disposing a huge chunk of its $500 billion capital business assets.
A few weeks ago, the company entered a deal to transfer ownership of its U.S. private-equity-lending unit to Canada’s biggest pension plan for $12 billion.
The company’s withdrawal from the banking sector is as a result of a plea by investors for GE to restore its focus to its industrial aspects. The investors were particularly concerned about the harsh regulations that federal controllers were imposing on the company especially on the returns.
General Electric Company (NYSE:GE) also announced on Tuesday that it is still waiting for approval from the Justice Department before finalizing the sale of its appliances business to Electrolux AB. The company hopes that the deal will be finalized before the end of the year. GE also expects an after-tax profit of 5 cents to 7 cents per share on closing.