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GE Capital Divestitures near $100B with Jet Financing Deal

General Electric Company GE inked an agreement to sell its corporate jet financing unit to luxury jet lender Global Jet Capital, as it continues to offload its financial assets at a breakneck speed.

The transaction is subject to customary regulatory and other approvals, and is expected to close in stages over the coming months.

The divestment represents aggregate ending net investment ("ENI") of about $2.5 billion. The deal will likely contribute about $300 million toward GE's targeted dividend of $35 billion under the divestment plan.

With $2.5 billion of net assets, the deal involves GE loans, leases and over 300 aircraft across the U.S., Canada, Mexico and Latin America.

For Global Jet Capital, this deal will more than double the size of its one-year old business, thus providing great scale at a very competitive cost of capital. The Florida-based firm is backed by three global investment firms - AE Industrial Partners, Carlyle Group and GSO Capital Partners, a part of The Blackstone Group L.P. BX .

The deal will expand Global Jet Capital's footprint in a market that Honeywell International Inc. HON estimated last year will expand by 9,450 jets over the next decade. A promising new company in the corporate aircraft space, Global Jet Capital is a well-backed private-equity player keen to expand its corporate aircraft portfolio.

The deal represents one of the biggest ever involving corporate aircraft, which are traditionally funded with loans or finance leases rather than the rental agreements used by commercial airlines these days.

The sale is part of a string of GE Capital divestitures, as CEO Jeff Immelt manoeuvres the conglomerate back to its industrial roots. He intends to split off about $200 billion of financial assets, while expanding manufacturing capabilities at the same time.

With this latest deal, GE's announced asset sales have reached $97 billion year-to-date, well ahead of its schedule. In fact, the company raised its 2015 target for GE Capital asset sales from $100 billion to a range of $120 billion to $150 million.

GE presently carries a Zacks Rank #3 (Hold). A better-ranked stock in the conglomerate space is Danaher Corp. DHR , carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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