Synchrony Financial, the credit card unit of General Electric, made its debut Thursday as a public company, raising $2.9 billion in the year’s largest initial public offering.
The offering brings GE a step closer to reducing its footprint in financial services, a line of business that nearly kneecapped the company during the 2008 financial crisis. GE officials have said the company will return to its industrial manufacturing roots and focus on making products such as power generators and jet engines.
Synchrony hit the market at $23 per share, the low end of the $23-to-$26-per-share range listed in its offering. That values the company at $19.1 billion. The shares were unchanged on its first day of trading, closing at $23.
GE sold 125 million shares of the company, or 15 percent, with plans to distribute the remaining shares to GE stockholders in a tax-free transaction in late 2015.
“The IPO also furthers our goal to position GE Capital as a smaller, safer specialty finance leader,” Jeff Immelt, GE chairman and chief executive, said in a statement.
Immelt said he wants the company’s industrials business to constitute 75 percent of profits by 2016, up from 55 percent last year. To that end, the company agreed in June to pay $13.5 billion for the power and grid businesses of Alstom, a French company that holds interests in electricity generation and rail transport markets.
In its most recent quarterly earnings, GE reported that revenue from its industrial businesses climbed 7 percent, while revenue at its financing unit, GE Capital, declined 6 percent. Total revenue at the company crept up 3 percent to $36.2 billion in the second quarter, up from $35.1 billion for the same period a year ago.
“With a strong, competitively advantaged set of industrial businesses and a valuable, commercially focused financial services business, we believe our portfolio will deliver valuable growth for shareholders for years to come,” Immelt said.
In the lead-up to the financial crisis, GE’s financing operations generated more than half of the company’s earnings. When credit markets froze, the company struggled to access cheap funding and turned to a government debt guarantee program for help.
In the aftermath of the crisis, an interagency group of regulators, known as the Financial Stability Oversight Council, designated GE Capital as a systemically important financial institution. It is unknown whether GE’s efforts to consolidate its financing arm will affect that designation.
Synchrony provides private-label credit cards for retailers, including Amazon, Wal-Mart, Gap and J.C. Penney. Such private-label cards usually carry higher interest rates and lower credit lines than other types of plastic. The company reported $9.4 billion in revenue last year.
Last month, the Justice Department reached a $169 million settlement with Synchrony for allegedly excluding tens of thousands of Spanish-speaking credit card customers from a debt-reduction program it ran for two years. The agreement called for the firm to provide compensation to 108,000 Hispanic card holders in the form of cash or reductions of their credit card balances.
Synchrony is listed on the New York Stock Exchange under the ticker symbol SYF. Proceeds from the offering will be used to repay debt as well as invest in liquid assets, according to the company.