FAIRFIELD, CONN. — In a deal totaling $9 billion, Capital One Financial Corp. (NYSE: COF) has acquired $8.5 billion of healthcare-related loans from GE (NYSE: GE), along with the company’s Healthcare Financial Services (HFS) U.S. lending business.
In a separate transaction, an unnamed buyer purchased $600 million of HFS real estate equity investments from GE.
HFS provides financing to U.S. healthcare companies, sponsors, investors and developers across healthcare sectors including seniors housing, hospitals, medical offices, outpatient services, pharmaceuticals and medical devices. Darren Alcus, president and CEO of HFS, will join Capital One. Capital One also will retain the HFS management team and employees.
“We’re pleased to sell HFS to a company that is committed to expanding the business,” says Keith Sherin, CEO of GE. “Our customers, sponsors and HFS employees will benefit from the synergies of combining Capital One’s existing healthcare lending businesses with the expertise, relationships and experience of our highly regarded HFS team.”
GE is looking to focus on its industrial businesses and is selling most GE Capital assets. GE and its board of directors have determined that market conditions are favorable to pursue disposition of those assets.
“We are on track to reduce our ending net investment (ENI) by $100 billion by the end of 2015 and expect to be substantially done with our exit strategy by the end of 2016,” says Sherin.
GE Capital will retain the financing verticals that relate to GE’s industrial businesses, including a unit that provides healthcare equipment financing to GE Healthcare customers and others.
The transaction is expected to close in the fourth quarter of 2015. Citigroup Global Markets Inc. and J.P. Morgan Securities LLC provided financial advice to GE and Hogan Lovells US LLP provided legal advice.
Capital One’s stock price closed at $80.87 on Aug. 11, up from $78.71 one year ago. GE’s stock price closed at $25.71 on Aug. 11, down from $25.79 one year ago.
— Haisten Willis