AGC buy puts GE's big footprint on Kiwi market

By Nick Stride

Friday 17th May 2002

Steve Bertamini

With the $A1.65 billion acquisition of Australasian finance company AGC, US giant GE Capital now has the critical mass to build a major presence in New Zealand.

"There are going to be some nice cross-selling opportunities with the enlarged customer base and the fuller product suite than we had previously," GE Capital's Asia president, Steve Bertamini, said in Auckland this week.

"AGC gives us scale and a broader product mix. There are a lot of growth opportunities."

The combined GE Capital/AGC business remains number two in the New Zealand market behind ANZ Bank's UDC Finance.

Mr Bertamini said GE Capital had about $300 million of assets and AGC took that to $1.2 billion.

KPMG's annual survey of financial institutions, released this week, put AGC's assets at $1.5 billion but that included what GE Capital terms "an anomalous figure."

The survey said finance companies were moving on to trading banks' traditional turf and their assets were growing rapidly.

Last year the assets of the 30 finance companies included in the survey rose by $1.5 billion to $8.9 billion, a 20% increase.

GE, the sprawling Connecticut-based industrial and finance empire, already had a low profile (New Zealand is not among the countries listed in the "country search" facility on its website) but wide-ranging presence here before it bought AGC.

The industrial business supplies medical, power, and lighting equipment, industrial systems, and plastics.

About 80% of Air New Zealand's aircraft are powered by GE engines.

The finance business, GE Capital, has branch-based personal loan business and a sales finance unit.

It lends on vehicle fleets and plant, equipment and machinery and supplies employees' reinsurance to companies and mortgage insurance to banks.

It leases aircraft worldwide and counts Air New Zealand, Qantas, and Virgin among its regional clients.

The AGC acquisition more than doubles employee numbers, to around 470.

Mr Bertamini, who is also GE's chief executive for Australia and New Zealand, said the New Zealand market was more fragmented than Australia's but, somewhat paradoxically, also enjoyed higher margins.

He saw cross-selling opportunities from adding AGC's car dealer business to GE Capital's personal loan business, and synergies from combining the two companies' commercial finance portfolios.

On the industrial side GE was starting to gain mass in its lighting and medical systems businesses.

The new, high-tech "Arctica" line of refrigerators would be launched here in September or October.

Comments from our readers

No comments yet