GE unloads ANZ financial subsidiary

SYDNEY, Australia — In one of the biggest deals in the Asia-Pacific region so far this year, General Electric Co. has agreed to sell the consumer- lending business of GE Capital in Australia and New Zealand to an investor group including KKR & Co. and Deutsche Bank AG -– a pact with an enterprise value of about $A8.2 billion ($6.26 billion).

The move comes as GE sheds more of its banking businesses globally amid investor pressure to return the conglomerate better known for its jet engines, power turbines and CT scanners to its industrial focus.

The investor group also includes $10billion alternative- investment firm Verde Partners, which has offices in Minneapolis, Minn., London and Singapore. Further details of the deal weren’t disclosed.

Shareholders have continued to penalize GE for what they perceive as a risky finance business, one that nearly toppled the company during the peak of the global financial crisis. Since then, GE has scaled back its finance arm, selling off billions of dollars of assets from commercial real estate to international banks. But the stock remains stuck below $30 and the company has underperformed some of its industrial peers that don’t have big lending operations.

As recently as a year ago, in his annual letter to shareholders, Chief Executive Jeffrey Immelt defended GE Capital, calling it “a valuable middle-market franchise that builds on GE strengths and our domain expertise.” But investors still think GE Capital is too large and too risky, and exposes the company to increased costs as regulatory standards tighten.

Earlier this month, The Wall Street Journal reported that GE was considering making bigger cuts to its banking business amid investor discontent with its returns from lending.

At an investor conference in February, GE Chief Financial Officer Jeffrey Bornstein said investors remain concerned about the size and returns of the lending business, and how new bank regulations affect the business’s ability to generate returns. “We will continue to look at the balance of the portfolio,” Mr. Bornstein said. “A lot of this is going to play out in the next couple of years. We’re focused on being small.”

Mr. Immelt has said he aims to reduce GE Capital’s share of the broader company’s profit to 25% in 2016 from 42% last year and more than 50% before the financial crisis.