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GE announces latest sale of energy project financing business to Starwood
Posted on Wednesday, 08 August 2018 13:56
Starwood Property Trust is taking over the energy project financing debt business and loan portfolio of General Electric (GE) for USD 2.56 billion, including USD 400.00 million of unfunded loan commitments.
This is the New York-listed vendor’s latest announced sale in 2018, with other divestments including its distributed power assets to Advent for USD 3.25 billion, its transportation unit for USD 11.10 billion to Westinghouse Air Brake and the USD 2.60 billion disposal of its industrial solutions division to ABB.
GE has been restructuring operations from GE Capital since 2015, following its strategic plan for the next few years to focus on core businesses.
Under this proposal, chief executive John Flannery’s has underlined USD 20.00 billion-worth of asset sales this year as part of his tactics of reducing the USD 358.10 billion debt pile, as of 31st March 2018.
GE said the sale of its energy financial services operations to Starwood will help to reduce the size of its asset base in support of a smaller and more focused GE Capital business.
The buyer will add the target to its Starwood Energy Group, which specialises in comparable energy infrastructure equity investment and has executed USD 7.00 billion worth of transactions.
Starwood believes the acquisition will boost core earnings and it plans to finance the deal using a new secured term loan facility.
Closing is subject to the usual raft of approvals and is slated for the third quarter of 2018.
This represents Starwood’s largest ever acquisition, according to Zephyr, the M&A database published by Bureau van Dijk, with other purchases including LNR Property for USD 1.06 billion in 2013.
GE’s project finance debt business includes senior secured debt in thermal power, renewable energy and midstream assets in the US.
The portfolio also comprises USD 2.10 billion worth of 51 loans backed by assets such as pipelines, power plants and wind farms, as well as USD 400.00 million in unfunded commitments.
Starwood announced its financial results for the opening six months of 2018 at the same time as the acquisition; it posted revenue of USD 530.13 million and a net income of USD 209.16 million.
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