Capital One Financial Corp. has signed a deal to acquire the healthcare financing business of General Electric Capital Corp. as part of GE's plan to reduce the size of its financial services division.
Under the agreement, Capital One will take over about $8.5 billion in healthcare-related loans and pay a 6% premium to the par value of all receivables as of June 30.
GE announced in April that it was planning to sell most of its assets under its GE Capital division to create a “simpler, more valuable company.” Under its streamlined strategy, GE expects 90% of its revenue to come from its high-margin industrial businesses by 2018, up from 58% last year.
The company will retain its healthcare equipment financing business because it ties into the core industrial focus.
GE's healthcare financial services business provides financing to a number of different sectors, including healthcare providers, senior housing, medical offices, drug companies and medical-device makers. It participated in 240 transactions in 2014, a 20% increase over the previous year.
The companies expect to complete the deal in the fourth quarter. The division's current president, Darren Alcus, will join Capital One to lead the firm's healthcare finance business.