Blog Coverage GE Offloads its 43% Stake in Hyundai Card Co. to Hyundai Commercial and Other Investors

Upcoming AWS Coverage on Eaton Corp. Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 2, 2017 / Active Wall St. blog coverage looks at the headline from General Electric Co. (NYSE: GE) as the Company announced on February 01, 2017, that it has decided to offload its stake in South Korean credit card company, Hyundai Card Co. Ltd, as a part of its strategy to reduce its exposure in the financial services sector. Register with us now for your free membership and blog access at:

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One of General Electric’s competitors within the Diversified Machinery space, Eaton Corp. PLC (NYSE: ETN), announced on January 16, 2017, that it will release its Q4 2016 earnings on Thursday, February 02, 2017, before the opening of the NYSE. The Company will host a conference call at 10 a.m. ET that day to discuss its earnings results with securities analysts and institutional investors. AWS will be initiating a research report on Eaton Corp. in the coming days.

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The details of assets sale

GE and Hyundai had formed a joint venture – Hyundai Card to issue credit cards in South Korea, and GE owned 43% stake, or approximately 69 million shares (as on September 30, 2016), in this venture. Hyundai Motor held 59.3 million shares in Hyundai Card as on September 30, 2016. GE has sold the entire 43% of the stake to Hyundai Commercial, Affinity Equity Partners, GIC, and AlpInvest. The transaction represents GE’s aggregate ending net investment of approximately $1.3 billion as of the end of the fourth quarter 2016.

Hyundai Commercial is the auto-financing arm of Hyundai Motor Group and has confirmed that is acquiring 30.5 million shares from GE. Hyundai Commercial will be paying 298 billion won, or approximately $258 million, for these shares. In the regulatory filing by Hyundai Commercial, it mentioned that the acquisition of these shares is for “management purposes”.

The other investors Affinity Equity Partners and AlpInvest are private equity investors and GIC is Singapore Government’s sovereign wealth fund. The percent of stake acquired by the other investors as well as their financial value has not been shared by any of these parties. The transaction is expected to close by the end of February 2017.

Commenting on the divesture, Rich Laxer, GE Capital Chairman and CEO said:

“As we continue to sell most of the assets of GE Capital, we have worked with our joint venture partner, Hyundai, to find the solution that works best for all parties. We’re pleased that we were able to fully exit our stakes in Hyundai Card Co. Hyundai has been a great partner over the last 12 years providing value for customers.”

Transformation part of GE’s long-term business strategy

Following the challenges faced after the financial crisis, GE has been consciously focusing on building a premier industrial company with businesses in high-growth industries and is reducing its share in the financial services business. As a part of this overhauling process, Jeff Immelt, Chairman and CEO of GE, had announced in April 2015 that the Company would sell off approximately $200 billion of its financial arm – GE Capital’s assets. However, it will continue financing verticals directly related to GE, i.e. GE Capital Aviation Services, GE Energy Financial Services, and the Industrial Finance segment.

Since then GE has been selling off various assets of GE Capital. GE has nearly achieved its target of selling the entire assets of GE Capital. So far, the Company has signed a total of $198 billion worth of assets sale agreements, this includes the current transaction. Out of the total $198 billion, GE has successfully closed transactions valued more than $190 billion. In October 2016, GE had completed the sale of the remaining 20% stake in the consumer finance company Hyundai Capital Services for approximately $530 million. GE had a 43.3% stake in the joint venture with Hyundai Motors formed in 2004. Hyundai Motor and Kia Motors bought back the 23.3% in Hyundai Capital in December 2015.

Stock Performance

At the closing bell, on Wednesday, February 01, 2017, General Electric’s stock marginally slipped 0.03%, ending the trading session at $29.69. A total volume of 25.67 million shares were traded at the end of the day. In the last three months and previous twelve months, shares of the Company have advanced 2.80% and 8.42%, respectively. The Company’s shares are trading at a PE ratio of 29.17 and have a dividend yield of 3.23%. At Wednesday’s closing price, the stock’s net capitalization stands at $262.65 billion.

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