General Electric is selling its healthcare lending sector to Capital One Financial for $9 billion.
As General Electric continues to strip its financial contingent, Capital One Financial has agreed to purchase GE’s healthcare lending division for around $9 billion. The sale is expected to close in the fourth quarter of this year, and will contribute to the divestiture of its assets valued at about $78 billion. GE has projected a target of around $100 billion of its assets to be sold.
“We are on track to reduce our ending net investment by $100 billion by the end of 2015 and expect to be substantially done with our exit strategy by the end of 2016,” said Keith Sherin, CEO executive of GE Capital, the company’s financial-services unit.
According to a Wall Street Journal report, GE has been under the gun from investors to reform its business model back to its industrial beginnings because investors claim that a wave of federal regulations and altering market conditions have stunted profits.
For Capital One, the acquisition will increase its presence in the burgeoning healthcare market. According to Michael Slocum, president of Capital One’s Commercial Bank, “This addition will catapult us to a leading market position in providing financial services to the healthcare sector.”
GE’s healthcare division lends money to financial enterprises, investors and developers across the healthcare spectrum. Stated on its website, it loaned more than $10.5 billion in financing acquisitions, refinancings, working capital, and other initiatives.
Additionally, the multi-national conglomerate plans to sell off $600 million of real estate equity investments to an anonymous purchaser.
Capital One has evolved to a full provider of banking and lending services. Now worth an estimated $200 billion in deposits and $310 billion in assets, Capital One is one of the nation’s most influential banks.