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As part of the first contract with new CEO Larry Culp, GE (GE) announced Monday the transfer of a $ 1 billion portfolio of energy investments to private equity firm Apollo Global Management.
The portfolio contains approximately 20 investments in renewable energy, natural gas and intermediate infrastructure assets. The investments – for the most part – were invested in GE Capital's Energy Financial Services division, which invests and lends to GE's customers in the energy and renewable energy sectors.
GE and Apollo (APO) said the portfolio was about $ 1 billion, including debt. The details of the transaction, which should be finalized before the end of the year, have not been disclosed.
GE, riddled with debt, is looking to raise funds by bidding farewell to countless companies, including some that she 's been holding for more than a century.
In recent months, GE has agreed to sell its 111-year-old locomotive division and has struggled to find a buyer for the Thomas Edison block bulb. GE has also announced its intention to get rid of the health division, which manufactures MRI devices, and to withdraw from its stake in Baker Hughes (BHGE), the oil and gas services company.
At the same time, GE continues to reduce its size, GE Capital, the financial activity that almost ruined the company during the 2008 financial crisis. GE Capital lost billions of dollars because of insurance losses and a survey of WMC, a subprime mortgage lender that GE shut down ten years ago.
In August, GE agreed to sell its energy debt financing business to Starwood Property Trust (STWD) for $ 2.6 billion.
GE Capital said it continues to provide capital to GE's customers in the energy and renewable energy sectors, despite the sale announced Monday. GE Power, the largest remaining company at GE, is discouraged by its abandonment of fossil fuels and a technical problem with its gas turbines.
Wall Street is betting that Culp, the former CEO of industrial manufacturer Danaher, will act quickly to stop the bleeding at GE. After plummeting to nine-year lows in September, GE shares climbed 17% in the first week of Culp. It was the best GE week since 2009.
GE's shares rebounded an additional 2% on Monday as a result of the latest transaction and Barclays' optimistic research report. The company has upgraded its GE shares to "overweight" them to neutral and expected positions. Culp will be more aggressive in reducing costs at GE Power.
"We believe that the upside potential of stocks is considerable now that an outside chairman and CEO has been appointed," writes Barclays analyst Julian Mitchell to his clients.
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