Jeffrey Immelt, poised for the biggest restructuring push on his watch at General Electric, is plotting acquisitions to complement an industrial portfolio spanning jet engines to locomotives to oil-field equipment.
With GE planning to sell the bulk of its GE Capital unit, Immelt said he will spend as much as $ 5 billion a year to expand the manufacturing units. GE's chief executive is getting a start on building up cash for purchases and stock buybacks with a $ 26.5 billion plan to dispose of real estate assets.
"We're always looking for ways to grow our industrial businesses," Immelt said Friday in a telephone interview. "We've got so many investment opportunities in the businesses we're in today — oil and gas and health care and aviation."
The decision to unload most of GE Capital breaks with Immelt's incremental pace of dispositions to wean GE from the unit that destabilized the parent company during the 2007-2008 financial crisis. Shrinking GE Capital may let it escape designation as a systemically important financial institution, and GE said it's working with federal regulators.
"The timing was very good to be a seller of financial service assets," said Immelt, 59, who has been chief executive since 2001. "You've got slow growth, you've got low interest rates, you've got lots of liquidity, you've got search for yield."
Talks are underway with potential buyers, GE Capital chief executive Keith Sherin said in the interview. "There may be one or two transactions that might be a public market transaction over the next 18 months," said Sherin, who wouldn't elaborate on the prospects.
In reemphasizing industrial operations, Immelt is turning GE back to the traditional heart of the company founded by Thomas Edison and away from the era of finance expansion under then-chief executive Jack Welch in the 1980s and 1990s.
GE Capital is so big that it earned a designation as a systemically important non-bank by the Financial Stability Oversight Council in 2013, putting it under Federal Reserve scrutiny. While GE Capital didn't fight regulators on the designation, most companies under consideration by the panel have tried to escape that tag.
Immelt said Friday that GE sensed an opening to shed the label.
"There's increasingly more clarity, as we shrank, what it means in terms of being able to file for de-designation as a SIFI," Immelt said. "We get under $ 100 billion of ending net investment, and there's an opportunity to see it from a regulatory standpoint."
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