GE continues to grow and extend its finance portfolio. GE has officially agreed to an $8.5 billion deal in the sale of its healthcare finance unit with Capital One. As you already know Capital One is one of the most successful banks in the US as well as one of the fastest growing.
The deal is set to have Capital One pay a 6% premium to the value of the unit’s loans in order to acquire the business. This move will help Capital One become a major contender in the commercial bank space. The healthcare unit provides specialized financing to companies, developers, investors, and many sectors within the industry including hospitals and medical device organizations.
Since the financial crisis a few years ago, Captial One has been aggressively pursuing new deals in order to re-grow and recuperate their losses. Between this deal and the acquisition of ING’s online banking business in the United States, they are on the right track. For your reference, at the end of June 2015, Capital One had grown its assets to $311 billion.
Michael Slocum, President of Capital One’s commercial banking division went on record with his thought regarding the deal saying, “This is a strategic investment in a specialty industry segment that we have been building out for the past several years. This addition will catapult us to a leading market position in providing financial services to the healthcare sector.” On the other hand, Jeff Immelt, GE’s Chief Executive said back in April that the “conglomerate” would dispose of most the company’s financial services in order to make the company return to their foundational business.
Although GE is trying to get back to its roots as quick as possible it is still trying to sell most of its domestic and foreign commercial lending businesses as well as its global consumer business. Both Wells Fargo and Blackstone have come out as major interests and potential future buyers of these assets.