General Electric Co. said Monday it would sell a bulk of GE Capital’s U.S. restaurant franchise financing assets to three regional banks in separate deals as the industrial conglomerate winds down its financing arm to reduce regulatory burden and focus on high-tech products, like jet engines and power turbines.
The sales would represent an ending net investment of about $1.4 billion at March 31, the Fairfield, Connecticut-based company said in a press release. It is expected to release about $200 million of capital for GE.
The sale is part of GE's plan to sell about $200 billion of GE Capital's businesses worldwide by the end of this year as it switches focus back to its industrial roots.
To facilitate this, the latest set of deals is aimed at the sale of the restaurant franchise assets to First Horizon National Corp., Wintrust Financial Corp. and Sterling Bancorp.
The three banks will acquire assets based on the location of the regional headquarters of the borrowers, GE said.
Tennessee-based First Horizon National, with assets of approximately $27 billion, will acquire assets in the Southwest and Southeast United States. Wintrust Financial, an Illinois-based bank with approximately $23 billion in assets, will acquire assets in the Midwest and part of the West. Finally, Sterling National Bank, headquartered in New York with approximately $13 billion in assets, will acquire assets in the East, mainly in its core markets of New York, New Jersey, Pennsylvania and Connecticut.
“As we continue to execute on our strategy to sell GE Capital’s assets that are not linked to GE, the sale of these restaurant financing assets represents our last major U.S. platform transaction,” GE Capital Chairman and CEO Keith Sherin said in the statement.
“We are pleased to reach separate agreements with three strong buyers that will be able to continue to serve our customers and restaurant brands as they continue to grow,” he added.
Barclays and Moelis & Company were GE’s financial advisers and Hogan Lovells was legal counsel on the transaction, which is expected to close in the third quarter.
GE shares, down 6 percent this year, were 1.68 percent lower and fell by 4 cents to $29.28 in after-hours trading.