Synchrony Financial: A Quick Look at the S-1 Filing
In May of 2013, GE CEO Jeff Immelt stated his intent to reduce the size of GE’s finance businesses, setting a goal to reduce assets by half their pre-crisis amount. After divesting select assets within business units, GE announced in November 2013 that it intended to spin off its North American retail finance business through a public offering. GE filed an S-1 Prospectus for the new entity, to be named Synchrony Financial, on March 13, 2014, and plans to offer 20% of the company to the public in its IPO, tentatively scheduled for mid-to-late 2014. GE plans to divest its remaining 80% stake by 2015 via a tax-free distribution of GE common stock. Synchrony will be led by the CEO of GE’s North American Retail Finance unit, Margaret Keane.
As part of our continued coverage of the IPO, we have created a few simple graphics to provide a sense of Synchrony’s financial performance from the S-1.
- Synchrony will be comprised of three business segments, outlined in Figure 1.
- Going forward, the company will report “Platform Revenue” on a segment basis, as shown in Figure 2.
- The business has delivered strong financial performance over the past three years, posting metrics that are similar to its closest competitor, Citi Retail Services, as seen in Figure 3, recognizing there may be differences in accounting treatments of publicly released figures.
Figure 3: Summary Financial Metrics: Synchrony vs. Citi Retail Services
(2011 – 2013)1
1 Synchrony metrics are for entire consumer finance business (Retail Card, Payment Solutions and CareCredit) unless noted otherwise. Citi metrics are for Citi Retail Services segment, based on data reported within the quarterly Financial Supplement and in Citi’s 10-K filings.
2 Net Revenue Yield: Interest and Non-Interest Income, Less Cost of Funds, Less Partner Payments, as a percentage of Average Receivables.
Source: Synchrony S-1 Prospectus, company investor relations and press releases, The Wall Street Journal.
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