Cash-strapped GE unloads $1 billion of energy investments

General Electric might be under new management, but its quest to get smaller continues.In the first d...

Posted: Oct 8, 2018 11:28 PM
Updated: Oct 8, 2018 11:28 PM

General Electric might be under new management, but its quest to get smaller continues.

In the first deal under new CEO Larry Culp, GE (GE) said on Monday it's unloading a $1 billion portfolio of energy investments to private-equity firm Apollo Global Management.

Business and industry sectors

Business figures

Business, economy and trade

Companies

Energy and utilities

Environment and natural resources

Environmentalism

GE Capital Corp

General Electric Co

Larry Culp

Renewable energy

The portfolio holds about 20 investments in renewable energy, natural gas and midstream infrastructure assets. The investments -- most of them equity stakes -- were housed in GE Capital's Energy Financial Services unit, which invests and lends to GE's power and renewable energy customers.

GE and Apollo (APO) said the portfolio is worth about $1 billion, including debt. Details of the transaction, which is expected to close before the end of the year, were not disclosed.

The energy sale comes just a week after embattled GE unexpectedly ousted CEO John Flannery after barely a year on the job. Culp, the new boss, is the first outsider CEO in GE's 126-year history.

Debt-riddled GE has been racing to raise cash by saying goodbye to countless businesses, including some it's held for more than a century.

In recent months, GE has agreed to sell its 111-year-old locomotive division and it's struggled to find a buyer for the light bulb unit that Thomas Edison founded. GE also announced plans to get rid of the health care division, which makes MRI machines, and to exit its stake in Baker Hughes (BHGE), the oil and gas services firm.

At the same time, GE continues to shrink GE Capital, the financial business that nearly ruined the company during the 2008 financial crisis. GE Capital has been bleeding billions because of insurance losses and an investigation into WMC, a subprime mortgage lender that GE shut down a decade ago.

In August, GE agreed to sell its energy debt financing business to Starwood Property Trust (STWD) for $2.6 billion.

GE Capital said it continues to provide capital to GE's power and renewable energy customers, despite the sale announced on Monday. GE Power, the largest remaining business at GE, is reeling from a shift away from fossil fuels and a glitch with its gas turbines.

Wall Street is betting Culp, the former CEO of industrial manufacturer Danaher, will act quickly to stop the bleeding at GE. After plunging to nine-year lows in September, GE shares spiked 17% during Culp's first week. It was GE's best week since 2009.

GE shares bounced another 2% on Monday following the latest deal and an optimistic research report from Barclays. The firm upgraded GE shares to "overweight" from neutral and predicted Culp will be more aggressive in cutting costs at GE Power.

"We think the upside potential in the shares is considerable now that an outside CEO has been put in place," Barclays analyst Julian Mitchell wrote to clients.

Oregon Coronavirus Cases

Data is updated nightly.

Cases: 79293

Reported Deaths: 973
CountyCasesDeaths
Multnomah18432251
Washington11175104
Marion9745153
Clackamas684183
Lane458650
Umatilla450250
Jackson402838
Deschutes255815
Malheur247245
Yamhill181817
Linn164124
Polk134319
Douglas99819
Klamath9475
Jefferson87811
Benton8557
Union8158
Morrow6757
Lincoln67015
Josephine5795
Wasco55419
Columbia5444
Coos4583
Hood River4343
Clatsop3820
Baker3014
Crook2486
Curry1532
Tillamook1480
Lake1451
Grant1391
Harney1051
Wallowa723
Gilliam230
Sherman230
Wheeler60
Unassigned00
Eugene
Clear
35° wxIcon
Hi: 44° Lo: 29°
Feels Like: 35°
Corvallis
Clear
34° wxIcon
Hi: 50° Lo: 27°
Feels Like: 34°
Roseburg
Overcast
39° wxIcon
Hi: 45° Lo: 33°
Feels Like: 39°
North Bend
Clear
46° wxIcon
Hi: 62° Lo: 38°
Feels Like: 43°
KEZI Radar
KEZI Temperatures
KEZI Planner

LATEST FORECAST

Community Events