(Updates with Bravia CEO comment in fourth paragraph.)
Aug. 1 (Bloomberg) -- General Electric Co. and a partner agreed to sell shipping-container lessor GE SeaCo for $1.05 billion to China-based HNA Group Co. and Bravia Capital as Chief Executive Officer Jeff Immelt reshapes GE’s finance business.
GE will receive about $500 million from the deal, which includes some assets owned by the company and SeaCo Ltd. that are managed by GE SeaCo, according to a statement carried on Marketwire today. SeaCo will get about $528 million, the statement said.
Immelt agreed to sell Fairfield, Connecticut-based GE’s 50 percent stake in the world’s fifth-biggest container-lessor as he sheds finance assets to focus on industrial units. HNA Group and Bravia plan to expand the container lessor’s fleet “significantly” over the next two years, according to the statement, as rising shipments of Asian-made goods to Europe and the U.S. boosts demand for cargo-boxes.
“GE has developed some of the most sophisticated sort of algorithms to make sure” that the containers are in the right place at the right time, Bharat Bhise, CEO of Bravia, said in a telephone interview. “This company comes not only with very strong management and very strong fleet quality, but also very strong systems, which is very important to us.”
The entire GE SeaCo management team is remaining with the business, he said.
GE Capital, the unit owning the GE SeaCo stake, is paring net investment in finance assets toward a 2012 goal of $440 billion from about $516 billion at the end of 2010’s first quarter. The cuts were ahead of schedule as of June 30, when the total was $457.3 billion, excluding cash, Chief Financial Officer Keith Sherin said July 22.
Shares of GE climbed 2 cents at $17.93 at 10:45 a.m. in New York Stock Exchange composite trading. The shares fell 2.1 percent this year before today.
GE kept another finance asset, its rail-car leasing business, last month after concluding that the unit was doing better than expected because of rising freight-shipment demand, a person familiar with the decision said.
Railcar leasing was moved to an operating unit within the finance division from so-called “red” assets, a group of businesses marked for wind-down or sale.
HNA Group, backed by the government of China’s Hainan province, has a fleet of 30 container ships and a container-ship finance arm, according to the statement. It also has investments in airlines, airports, financial services and real estate. Hong Kong-based Bravia Capital is a private-equity firm with investments in transportation and logistics.
“GE SeaCo fills an important gap critical to our ongoing growth,” HNA Group Executive Director Adam Tan said in the statement. It “fits precisely into HNA’s strategic plans to quickly grow our logistics and transport business,” he said.
The acquisition, which is subject to regulatory and shareholder approval, is being funded by a combination of equity and debt, according to the statement. HNA and Bravia have arranged a debt facility through Deutsche Bank AG and ING Groep NV. Deutsche Bank Securities Inc. advised the sellers on the deal.
GE SeaCo owns and manages the equivalent of more than 870,000 20-foot containers, according to the statement. The lessor’s senior management, including Chairman and acting CEO David G. Amble, will remain in place, it said.
HNA prevailed in an auction that also drew interest from Textainer Group Holdings Ltd., the world’s largest container- lessor, and private-equity firm Kelso & Co., according to people with knowledge of those firms’ interest.
Container lessors are benefiting from growing freight demand, limited supply and higher prices for new units. The cost of a new cargo box rose to a record this year, according to the World Shipping Council trade group.
In May, HNA agreed to buy a 432 million euro ($624 million) stake in a Spanish hotel chain. The company said in July it may bid for Hochtief AG’s airport-operating unit, gaining control of airports in Hamburg, Sydney, Budapest and Athens. It also agreed to invest in Turkish cargo carrier, ACT Airlines Inc.
--With assistance from Niamh Ring in New York and Jasmine Wang in Hong Kong. Editors: Ed Dufner, James Langford
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