 "Our competitive edge is platform, technology and great customer service: Pramod Bhasin")
Pramod Bhasin, former chief executive officer of GE Capital and founder of Genpact, on Thursday announced the acquisition of GE Capital’s commercial lending and leasing business in India. He along with AION Capital and Anil Chawla, former head of GE Capital’s commercial business, and DE Shaw India will float a company that will take over the business, valued at $360 million (Rs 2,410 crore).
The partners did not reveal the deal size, though it is understood to be at a premium to the valuation. “The transaction represents ending net investment (ENI) of approximately $0.4 billion as of the end of the second quarter of 2016,” said General Electric from Boston. Parth Gandhi, senior partner at AION India Investment Advisors, said it was one of the largest private equity deal for GE.
The selloff is part of GE’s global strategy to stick to its main business of manufacturing. “The transaction is in line with our global strategy as we continue to reduce the size of GE Capital,” said Banmali Agrawala, president and CEO, GE South Asia.
The partners did not reveal the deal size, though it is understood to be at a premium to the valuation. “The transaction represents ending net investment (ENI) of approximately $0.4 billion as of the end of the second quarter of 2016,” said General Electric from Boston. Parth Gandhi, senior partner at AION India Investment Advisors, said it was one of the largest private equity deal for GE.
The selloff is part of GE’s global strategy to stick to its main business of manufacturing. “The transaction is in line with our global strategy as we continue to reduce the size of GE Capital,” said Banmali Agrawala, president and CEO, GE South Asia.
Started in 1993, GE Capital’s non-bank finance company (NBFC) operations in India have served around 10 million corporate and consumer finance customers. It had three key verticals — auto, health care (medical equipment) and corporate loans. After the deal, GE Capital will be left with commercial aviation financing, energy financing and State Bank of India Card joint venture in India.
The deal includes buy-out of GE Money, Bhasin said. GE Money Financial Services focuses on commercial finance in India with offerings in corporate lending and leasing after it sold off the home equity portfolio to Magma Advisory Services in February 2013.
Announcing the acquisition, Bhasin said GE Capital businesses have a rich legacy of financial products and services, coupled with a highly experienced management team with the best traditions of GE. “We have an opportunity to combine the best of this legacy with new analytical capabilities and technologies to provide excellent customer service with exceptional speed and customisation.”
Analytics will be used across the board for risk management, effective marketing and sales as well as for distribution strategies.
The new entity will add customers from tier-III & IV cities. The company plans to serve the agriculture sector and aims to expand into micro finance business.
Around 100 employees of GE Capital will move to the new company. Besides, the company would also hire afresh. “We expect to build new platforms as well as web-based and mobile capabilities to provide enormous flexibility to our customers. We are deeply familiar with these businesses, having started them in 1993 from scratch,” said Bhasin.
GE is focusing on its high-value industrial businesses and is selling most of GE Capital’s assets. It only plans to retain the financing verticals that relate directly to its industrial businesses. Since the April 2015 announcement, GE Capital has signed agreements for the sale of approximately $192 billion of businesses and has closed approximately $170 billion of those transactions.
GE Capital plans to largely complete the process of selling $200 billion of businesses by the end of 2016 and deliver $35 billion of dividends to GE under this plan.
Gandhi will be a member of the board of the newly-formed company. “We see a vast opportunity for financial services growth in India, especially with the government’s push towards financial inclusion across the country’s population and financial sector reforms. We intend to expand the current team and pursue a strategy of stability and prudent growth,” he said. The company will look for a pan-India presence with steady growth and expansion for these businesses, besides looking for acquisition opportunities to grow in-organically, said Anil Chawla.
