GE Money personal loans, mortgage biz portfolios find no takers

GE Money India wants to sell its mortgages portfolios and personal loan and has been searching for the right party but it seems, it has not been able to find the takers for its portfolios. Although some interested parties have quoted but it has not been up to the mark of the company’s expectation. The bidders are of a view that this can ultimately lead to the proposed divestment plan being scrapped.

According to sources recently the bidders have informed Morgan Stanley, advisor to GE Money India that their assessments are in the range of $150-200 million. Whereas GE Money had pegged the base price of these two businesses at $400 million - the amount it had invested in them - and was looking for a premium over this.

They added the businesses, which are on the block have lost their charm as the result of the US subprime crisis and subsequent depreciation of personal and mortgages portfolios across the globe. Subsequently the portfolio quality has also declined for most of the players in India because of the aggressive methods being used by the collection agents hired by the regulators.

Experts are of the view that the situation is unlikely to get better in a year or so.

"Under the changed scenario, the attraction for GE's businesses could be their network. But we did not find merit in quoting more than $200 million for the network which we can built across the country in a year or so," said a source close to one of the bidders. It has 180 offices in 120 towns with 450 full-time employees and 2600 contingent staff.

A source close to another bidder said, "We are not very confident about quoting anything near to GE's expectation as we believe delinquencies in most retail businesses in India are going up, with GE being no exception. In fact, that's why big banks are slowing withdrawing themselves from the personal business."

When ET reporter contacted GE Money India, the company spokesperson said, "As mentioned in the past, we have received strong expressions of interest for a likely partnership for our wholly-owned personal loans and mortgages portfolios. The process of review is still underway and hence we will not be able to respond to speculations or make any comments until such time that a final decision is made. GE Money remains steadfastly committed to India as a market for long-term growth and investment."
Code-named 'Project Intrepid', four months ago GE had put GE Money Housing Finance (excluding home loans distributed through a JV with Wizard home loans) and the personal loans business known as GE Money Financial Services on the block.

Around 40 companies including Tata Capital, Future Group, India bulls, the Aditya Birla Group and Carlyle carried out the due diligence. Reliance Capital had stepped back from the race in the initial days of the sale process citing the “high asking price.” GE Money India has planned an arrangement with Australia-based Wizard Home loans, a subsidiary of GE Money worldwide.

GE Money announced about this planned tie-up in September 2007. Company officials had talked of a $200-million equity investment and of building $2-billion home loan portfolio by 2011.