Long queue of buyers for home and personal loan portfolios of GE Money

GE Money Financial Services had announced selling of personal and home loan portfolio of General Electric’s consumer finance company. There is a long queue of portfolio buyers. Around a dozen players, from India as well as foreign, have shown their interest in buying these divisions. The list includes Kishore Biyani’s Future Capital, the Tata group’s recently-floated financial services firm Tata Capital, private equity investors such as Carlyle Group, ChrysCap, Newbridge Capital, Cambridge Place and the Temasek subsidiary Fullerton. Amongst the large banks like HDFC Bank and Deutsche Bank also seems to be interested. It will take a few months to finalize the deal that might get GE Money a assessing close to Rs 1,000 crore.

According to sources GE Money’s advisor, Morgan Stanley is having talks with these players for the portfolio sell-off. But it is not clear whether GE will be offloading the entire portfolio. Other Indian entities interested in GE Money are Anil Ambani’s Reliance Money and Indiabulls.

When contacted, the GE Money spokesperson told that it was looking for a strategic partner for its “wholly-owned personal loans and mortgage portfolio only.” However, she declined to give out the names of bidders. She said: “It is too early for us to give a definite answer. GE Money will continue to build on its partnership in SBI Card and continue to invest in its fast-growing Wizard Home Loans JV, as well as to seek growth opportunities in other segments. GE Money remains committed to India as a market for growth and investment”.

As per sources, the deal is seen as a ‘complex transaction’. “The value of the operations lies in GE Money’s network since a large part of its business in India is mortgages and barely profitable,” said a source. Most of the players, who are interested in the deal, are quite new entrants keen to expand their operations in the country. HDFC Bank and Deutsche Bank are also said to be looking at the transaction.

Last year GE Money profit declined to Rs 10 crore as against Rs 50 crore in the previous year. It is having a Rs 6,000-crore loan book dominated by residential mortgages. In the loan book home loans is at the top accounting for over 50% of the portfolio while the remaining is personal, auto and consumer durables loans.

Dhanpal Zaveri, who has recently joined the Future Capital board, is negotiating on behalf of the Biyani group. Till last year he was associated with Sterlite Industries’s ADR. When contacted, officials at Future Capital and Tata Capital declined to comment on the development.

Picking up GE’s consumer finance business will be helpful for Future Capital to scale up its presence in the country. The company’s consumer finance business, Future Money mainly target at the middle and mass end of the consumption market with a retail credit plan that will cover every aspect of consumer finance from credit cards, auto and consumer durable finance, mutual funds, insurance, money transfer, financial planning, microfinance and mortgages.

It has started rolling out Money Bazaars across the country. Tata Capital too has ambitious plans. Six months ago the group had announced that Tata Capital will project into capital market services, merchant banking, housing finance and private equity investments, assets and vehicle financing and retail finance. Sources said acquiring of GE Money will give Tata Capital a major entry into the retail financing space.