Health & Fitness
International Investing - GE
The world is a big place – there are over 190 countries and 7 billion people in the world, which really boggles the mind if you sit down and think about it. In addition to being an interesting intellectual exercise, this fact can also have broad implications for your investments and your financial future. It is easy to stay focused on U.S. firms, news, and events during the day-to-day grind, but it is always important to be aware of your surroundings – especially when it comes to your investments. With that in mind, this series of articles will focus on countries and investment opportunities outside the United States that you might not usually hear about.
As always, be sure to consult a financial services professional familiar with both the potential investment and your unique financial situation before embarking on any investment program.
General Electric
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General Electric is a household name in the U.S. and is one the most sprawling multi-nationals in the world. Operations in numerous countries generate revenues and incomes that top billions (in either dollars or euros). In addition to being a ubiquitous corporation that makes everything from lighting equipment to jet engines, the firm is also undergoing a dramatic shift. Under CEO Jeffrey Immelt, the firm has been trying steadfastly since the financial crisis to refocus the firm from financial services to its base as an industrial firm. In addition to these internal shifts and refocusing of the firm, there are also external factors that are impacting the firm, especially since the financial crisis.
Overseas cash balances, which have been growing since the financial crisis and generating much debate and arguinment over the potential for corporate acquisitions, are another driving force behind GE’s actions. Large cash balances have drawn the ire of both regulators and activist investors, with both groups criticizing firms for allowing overseas cash balances to grow, and not repatriating these cash earnings due to tax implications. One possible use of these cash balances, that will satisfy both activist investors and regulators, would be for firms to deploy these capital balances in international acquisitions.
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G.E., in its bid for Alstom, a French energy multinational, is an excellent example of this trend,while also illustrating some of the issues that so often rear their heads during international investment transactions, including disputes with foreign governments, rival bids from competing firms that operate with the same economic group (Siemens), and dealing with the history of both the of interest and their relationships with both the government and its local rivals.
A lot to digest and think to about, and something that can serve as a learning opportunity for all involved.
Interesting, indeed.
Happy Reading!
