This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

GE Files Registration for Credit Card IPO

Stocks in this article: GE

NEW YORK (TheStreet) -- General Electric (GE) on Thursday announced the first step of the planned spin-off of its North American Consumer Finance unit.

The company filed a registration statement with the Securities and Exchange Commission and said it expects the initial public offering to be completed this year, and that it is targeting to "complete its exit from the Retail Finance business through a split-off transaction in 2015."

The new company will be called Synchrony Financial.

GE announced its plan to exit its North American consume finance unit - mainly a credit card lender - in November, as part of CEO Jeff Immelt's plan to continue shrinking GE Capital and focus on the parent company's core industrial businesses.

Shedding the credit card assets will reduce GE Capital's liquidity requirements, which is part of GE's plan to avoid the type of liquidity crisis it faced in 2008, from its reliance on commercial paper for liquidity. GE plans to continue having GE Capital provide market commercial financing and lend to its industrial customers.

According to Synchrony Financial's S-1 filing, GE's North American Consumer Finance unit had $59.1 billion in total assets as of Dec. 31, with retail credit card receivables of $39.8 billion. Funding consisted of $25.7 billion in deposits gathered through GE Retail Bank, which will be renamed Synchrony Bank, as well $23.4 billion in borrowings. The unit's equity totaled just under $6.0 billion.

GE previously said it would offer up to 20% of the consumer finance unit's equity through the IPO, before eventually disposing completing its exit from the business in a transaction that would be tax-free to GE shareholders.

GE Capital's revenue for the fourth quarter was down 5% from a year earlier to $11.077 billion, while its profit rose 38% to $2.493 billion. For all of 2013, GE Capital's revenue was down 3% to $44.067 billion, while its profit was up 12% to $8.258 billion.

The unit paid $5.985 billion in dividends to the parent company during 2013, including $2 billion during the fourth quarter of 2012.

GE Capital's "ending net investment" (ENI), which excludes non-interest bearing liabilities, cash and equivalents, was $380 billion as of Dec. 31, down from $385 billion the previous quarter and $419 billion a year earlier. Immelt's goal is for the finance unit's ENI to shrink to a range of $300 billion to $350 billion.

The joint book-running managers for the Synchrony Financial IPO are Goldman, Sachs, J.P. Morgan, Citigroup, Morgan Stanley, Barclays, Bank of America Merrill Lynch, Credit Suisse and Deutsche Bank Securities.

Shares of General Electric closed at $25.76 Wednesday. The shares are down 7% this year, following a return of 38% during 2013. The shares trade for 14.2 times the consensus 2015 earnings estimate of $1.81 a share, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $1.70.

Based on a quarterly payout of 22 cents, the shares have a dividend yield of 3.42%.

This chart shows GE's stock performance since the end of 2011, against the Dow Jones Industrial Average and the S&P 500 :

GE Chart data by YCharts

Fannie Mae and Freddie Drop 39% Over Two Days

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,655.04 +298.17 1.72%
S&P 500 2,045.56 +32.67 1.62%
NASDAQ 4,725.8240 +81.5120 1.76%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs