GE to Sell Commercial Lending and Leasing Business in Japan

Industry:    2015-12-16

Sumitomo Mitsui Finance & Leasing Co. agreed to buy General Electric Co.’s Japanese leasing business for about $4.8 billion, rounding off the country’s biggest year for acquisitions since 2012. The unit of Sumitomo Mitsui Financial Group Inc. is expected to complete the purchase by April, the companies said on Tuesday. It’s the second acquisition of a GE business by the Tokyo-based financial group this year, after it bought the U.S. industrial giant’s European buyout-financing arm for $2.1 billion. The deal will help Sumitomo Mitsui Finance expand in commercial lending as well as the leasing of automobiles, office equipment and construction machinery at a time when Japanese companies are increasing capital spending. GE is selling its finance and consumer-focused businesses worldwide as part of Chief Executive Officer Jeffrey Immelt’s efforts to focus on industrial operations such as making jet engines. Japanese companies had already announced $167 billion of acquisitions at home and overseas so far in 2015, a three-year high, data compiled by Bloomberg show. GE’s leasing unit attracted interest from firms including Mitsubishi UFJ Financial Group Inc., Orix Corp. and Shinsei Bank Ltd. Capital Spending Demand in Japan’s 5 trillion yen ($41 billion) leasing industry “is expected to remain steady, underpinned by a continued increase in corporate capital spending as the Japanese economy recovers under Abenomics,” Sumitomo Mitsui Finance said in its statement. GE Japan has about 483,000 corporate clients with “very little overlap” with Sumitomo Mitsui Finance, the Japanese company said. Its services include an automated credit-screening system. Sumitomo Mitsui Finance is 60 percent owned by Japan’s second-largest financial group by market value, with the rest held by trading company Sumitomo Corp., according to the leasing firm’s website. The companies teamed up in 2012 to buy Royal Bank of Scotland Group Plc’s aviation leasing business for $7.3 billion. ‘Quick Progress’ Fairfield, Connecticut-based GE has operated in Japan since 1886, when it provided electric generators to a government printing factory. As well as finance and leasing, it has businesses in Japan spanning areas from health care to energy and water. “We continue to make quick progress on the sale of our international assets,” Keith Sherin, GE Capital chairman and chief executive officer, said in a statement. Morgan Stanley and its joint venture with Mitsubishi UFJ advised GE on the transaction and Goldman Sachs Group Inc. assisted Sumitomo Mitsui Finance.

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