Hospitals, retirement homes and makers of medical devices are among the healthcare organizations and businesses that may now consider calling Capital One, long known primarily as a credit card company, when they want to borrow big bucks.
The company announced Aug. 11 that it has inked an agreement to buy GE’s healthcare finance unit for approximately $9 billion.
GE Capital said the sale encompasses its entire Healthcare Financial Services (HFS) business, including $8.5 billion of current loans.
Capital One, which earlier this week warded off the press by suggesting the deal was only a rumor, also will gain some high-powered human capital.
Darren Alcus, outgoing president of GE Capital, becomes president of Capital One’s healthcare finance business, bringing with him an “experienced management team,” according to Capital One’s announcement, which did not give names or a headcount.
In a statement, Alcus said the healthcare finance professionals at Capital One “share our vision for providing the financial solutions that this complex industry demands.”
GE Capital’s HFS unit loaned more than $10.5 billion for acquisitions, refinancings, working capital and other purposes in 2014, according to The Wall Street Journal.
If the deal gets regulatory approval—and no one seems to be predicting snags—it will represent the fourth-largest acquisition by a U.S. bank since the 2008 financial crisis.
The WSJ also notes that, despite its prominence as a credit card specialist, McClean, Va.-based Capital One Financial Corp. has become one of the largest banks in the U.S., with more than $200 billion in deposits and $310 billion in assets.
Michael Slocum, Capital One’s president of commercial banking, characterized the purchase as a strategic investment “in a specialty industry segment that we have been building out for the past several years.”
For GE Capital, the sale is part of an aggressive selloff of financial services.
The broad divestment is aimed at allowing GE to concentrate on getting back to its industrial roots—including aviation, power generation and the manufacturing of medical imaging equipment.
“[W]e continue to demonstrate speed [as we] execute on our strategy to sell most of the assets of GE Capital,” said Keith Sherin, GE Capital chairman and CEO, in prepared remarks. “We are on track to reduce our ending net investment by $100 billion by the end of 2015 and expect to be substantially done with our exit strategy by the end of 2016.”
Both companies said they expect the sale to close by the end of this year.