GE Formalizes IPO Plan for Retail Finance Unit

Now we know. GE intends to conduct an initial public offering (IPO) of its North American Retail Finance business. The company calls this “a first step in a staged exit from that business.”

The SEC filing from Friday shows that it will file a registration statement with the SEC in the first quarter of 2014. No time frame was set for when the IPO will come to market other than being completed later in 2014. The company said:

GE currently intends to complete its exit from Retail Finance in 2015 through a split-off transaction, by making a tax-free distribution of its remaining interest in Retail Finance to electing GE stockholders in exchange for shares of GE’s common stock.

The details call for GE to issue up to 20% of the equity of the Retail Finance in the IPO in exchange for cash that will be used to increase the capital of the new company.

GE also said that it may decide to exit by selling (or otherwise distributing or disposing of) all or a portion of its remaining interest in the Retail Finance shares. Retail Finance will conduct business as usual through the IPO and eventual exit, continuing to serve its partners and customers as a separate public company.

GE shares were up 0.8% at $23.20 in early trading indications, and that matches the post-recession high for its stock price. Keep in mind that the Thomson Reuters consensus price target is also closer now at $27.33.

We recently highlighted how GE would or could get its stock up to $30 in 2014, and this was one of those strategies that would help on that front.