Mubadala GE JV evaluating options

01 July 2015

Mubadala GE Capital, a joint venture between the Abu Dhabi state-owned fund and General Electric’s finance business, is evaluating options for the future structure of the company, said a spokesman recently.

Three sources with knowledge of the matter told Reuters that the joint venture was studying options in the wake of the US conglomerate’s decision to exit most of its GE Capital operations. Two of the sources said Mubadala was actively seeking buyers for GE Capital’s shares in the joint venture.

“Given the strength of Mubadala GE Capital’s portfolio we are in the process of evaluating a range of options for the future structure of the business,” a spokesman for Mubadala GE Capital said.

Mubadala GE Capital, set up in 2009 as a 50/50 venture to invest globally in GE Capital-originated commercial finance assets, reported assets of $5.5 billion at the end of 2014, up from $4 billion in 2013.

GE said on April 10 it would shed the bulk of its finance arm to become a simpler industrial business. It will also return as much as $90 billion to shareholders.

At the time, Mubadala GE Capital told Reuters there were no plans to change the shareholding or strategy of the business as Mubadala GE Capital is an important component of the Mubadala-GE partnership and continues to deliver on its mandate of profitable growth.

However, unlisted Mubadala is now seeking partners to buy GE Capital’s 50 per cent stake, with one of the sources saying that private equity firms were among those being approached. The source added Mubadala had no desire to buy out GE’s stake.

Mubadala GE Capital raised $500 million in a five-year debut bond sale in November last year.

If GE Capital exits the joint venture, a change of control clause will be activated and bondholders will be paid at par, said one of the sources.

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