General Electric Co. is preparing to spin off one of its most important financial assets — the unit that issues store credit cards for 55 million Americans — as it retreats from one of the high-growth businesses that defined the modern conglomerate.
According to a Wall Street Journal report, the decision to divest the business, amid concerns about the company’s exposure to banking, marks an important moment in the evolution of GE and the country’s three-decade long consumer credit boom. GE Capital expanded to the point that its portfolio of loans and other assets now would rank it as the country’s fifth-largest commercial bank.
Preliminary work to separate the business through an initial public offering is under way, according to people familiar with the matter.
GE has said the U.S. consumer-finance business earned $2.2 billion last year. The operation accounts for about $50 billion of the $274 billion in loans outstanding by GE Capital.
An IPO could come early next year, the people said. Bankers from J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. are working on a possible offering, one of the people said. Alternatives including smaller spinoffs or asset sales are under consideration, the people said.
A sale of the unit would be quicker and more straightforward, but a buyer for the entire operation is unlikely to emerge given its large size and the fact regulatory hurdles largely prevent major banks from doing big deals.