Time for GE to find buyer for Garanti?
It is a perfect time for GE to sell its stake in Garanti, but finding the right buyer will not be easy.
The investment bank that won the mandate to sell GE Capital’s 20.85% stake in Turkish bank Garanti will be working hard for its fees (it is rumoured to be JPMorgan).
Garanti is one of the best-managed financial institutions in the emerging markets. Like other Turkish banks it has weathered the global financial crisis fairly well. As Turkey secures its place as one of the most favoured investment destinations in the region, Garanti is set to benefit.
For GE Capital, now is a better time to sell than any other since the collapse of Lehman Brothers. Garanti’s earnings performance this year is unlikely to beat last year’s, when falling local interest rates boosted gains from Turkish treasury bill portfolios. As interest rates are likely to rise later this year, Garanti will probably earn less and pay smaller dividends, and its share price could be affected.
In early 2010 Garanti’s stock price came back to the peak it reached at the end of 2007 and far above its level in 2005, when GE gained joint control of the bank. With the 20.85% stake worth about $3.3 billion, GE could get double the $1.6 billion it paid for a 25.5%