GE's Retail Finance Arm Raises $2.9 Billion in IPO

New York Times

- ‎17 hours ago‎

General Electric's retail lending arm, the financial power behind the private-label credit cards for the Gap and Amazon.

G.E.’s Retail Finance Arm Raises $2.9 Billion in I.P.O.

By MICHAEL J. DE LA MERCED

July 30, 2014 7:29 pmJuly 31, 2014 9:48 am

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General Electric‘s retail lending arm, the financial power behind the private-label credit cards for the Gap and Amazon.com, raised about $2.9 billion in its initial public offering on Wednesday, as the industrial conglomerate moves to shrink its once-enormous finance division.

The business, now known as Synchrony Financial, priced its shares at $23 each, at the low end of its expected price range. That values the newly independent company at $19.1 billion.

One reason why underwriters priced the offering at the low end of the range was because comparable publicly traded companies, including Discover Financial, also traded down during the road show for investors, people briefed on the matter said. Still, the offering was oversubscribed.

Synchrony’s I.P.O., the largest in the United States so far this year, constitutes one of the biggest steps yet by G.E. to reduce its dependence on GE Capital. The division was once the biggest driver of its earnings, but ultimately wounded the business titan during the financial crisis. G.E. has since moved to shed assets outside its core industrial and health care businesses.

Synchrony, whose roots date to 1932, has long been seen within G.E. as a nonessential part of GE Capital. It is the biggest provider of store-branded credit cards in the country, having financed $93.9 billion in sales last year. The business earned nearly $2 billion in profit, atop $11.3 billion in revenue.

Yet the stock sale will not end G.E.’s ties to the business. The conglomerate is not selling any shares in the I.P.O. and will retain a roughly 85 percent stake in Synchrony until late 2015.

Synchrony is expected to begin trading on the New York Stock Exchange on Thursday under the ticker symbol SYF. Its stock sale was led by Goldman Sachs and JPMorgan Chase.

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GE's Retail Finance Arm Raises $2.9 Billion in IPO

 

I would like to tell a true story that for me is still kind of "beyond belief" but it is still true. First, in 2003 my wife and I bought a motor home and financed it through GE finance. Then during the Great Recession GE needed to divest itself of most of it's loans to stay solvent so it sold many many loans (including ours) to the highest bidder. However, then it becomes problematic. As long as we made our payments it was okay. However, if we wanted to pay off our loan (which we did) it was impossible to contact that lender or even talk to anyone there. It was impossible to contact them through phone or internet and get any response at all. Finally, through our business manager and accountant we got our loan paid off. But, the loan company still hasn't given us title to our motor home even though it is completely paid off and we still are having problems having them give us title to our motor home from a completely paid off loan. But, now the motor home is 11 years old and we are thinking of selling it and can't because we can't seem to get a clear title even though it is completely paid for. This is just one of the crazy things that came out of the Great Recession for my family.  You likely have your own crazy stories like this to tell as well.