CAT Caterpillar Inc

General Electric Co. has agreed to sell its Australian commercial-lending operation to Sankaty Advisors, the global credit affiliate of Bain Capital, dismantling another key piece of GE Capital in Asia.

The deal, which will be financed by Deutsche Bank, is valued around 1.9 billion Australian dollars (US$1.34 billion) including debt, according to a person familiar with the situation. It also completes GE's asset sale process in Australia and New Zealand. In March, GE struck a deal to sell its Australia and New Zealand consumer-lending business to a consortium including KKR & Co. for an enterprise value of US$6.3 billion, including debt.

"We continue to make strong progress in our efforts to reduce the size of GE Capital. To date, we have signed agreements to sell approximately US$128 billion of GE Capital, more than 60 percent of our overall plan," said Keith Sherin, GE Capital's chairman and chief executive.

GE Chief Executive Jeff Immelt laid out plans earlier this year to sell or spin off the bulk of GE's US$500 billion in global financial assets, aiming to use the proceeds to return US$50 billion to shareholders.

GE hopes that investors will give the company a richer valuation if it goes back to its industrial roots and delivers steadier earnings without the volatility generated by GE Capital's operations.

Last month, it agreed to sell its commercial lending and leasing business in the U.S.--the largest remaining chunk of its U.S. financial services operations—to Wells Fargo & Co.

The latest Australian deal comes as the U.S. conglomerate considers a short list of bids for its Japanese commercial-finance operations, which are expected to fetch several billion dollars. GE has short listed several Japanese firms, including the leasing units of megabanks Sumitomo Mitsui Financial Group Inc. and Mitsubishi UFJ Financial Group Inc., according to people familiar with the matter.

The Australian commercial lending operation specializes in loans to midsize companies, defined as those with a revenue of 10 million Australian dollars (US$7.9 million) to A$250 million. It also provides equipment leasing. Its customers include camping trailer manufacturer Jayco, winemaker Hardys, and Hastings Deering, a distributor of Caterpillar earthmoving equipment.

In addition to the capital business, GE has substantial other operations in Australia and New Zealand ranging from equipment for liquefied-natural-gas projects to mining gear and wind-farm turbines.

Write to Rebecca Thurlow at rebecca.thurlow@wsj.com

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(END) Dow Jones Newswires

November 09, 2015 04:55 ET (09:55 GMT)

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