General Electric shares leap on plans to shrink finance arm

 
Emma Haslett
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By 2018, 90 per cent of its earnings will come from "high-value industrials", the company said (Source: Getty)

Shares in General Electric rose eight per cent to $27.95 in morning trading in New York, after it announced plans to massively shrink its finance arm.

Jeff Immelt, the US giant's chief executive, unveiled plans to reduce the size of GE Capital, moving the company's focus back to its manufacturing roots. The plans included a huge $50bn (£34bn) share buyback scheme - the second largest ever.

The company added it was planning to sell most of its property portfolio to Blackstone and Wells Fargo for $23bn. It also has letters of intent from other, unidentified, buyers to dispose of an additional $4bn of assets.

Immelt said it will "pursue disposition of most of GE Capital assets over the next 24 months". By 2018, the company said "high-value industrials" - including aviation, power and water - will comprise more than 90 per cent of its earnings.

GE today is a premier industrial and technology company with businesses in essential infrastructure industries. These businesses are leaders in technology, the Industrial Internet and advanced manufacturing. They are well-positioned in growth markets and are delivering superior customer outcomes, while achieving higher margins. They will be paired with a smaller GE Capital, whose businesses are aligned with GE’s industrial growth.

However, the company expects to take charges of $16bn on the restructuring in the first quarter, although $12bn of that will be non-cash.

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