According to a Reuters report, diversified conglomerate General Electric Company (GE - Analyst Report) is entrusted with the responsibility of building the critical infrastructure related to the railway and energy sectors in Angola by the Export-Import Bank (Ex-Im) of the U.S. The strategic effort is likely to enable the second-biggest oil producer of Africa to rebuild the transport, electricity and communications networks ravaged by the 27-year civil war that ended in 2002.
The deal financed by Ex-Im entails General Electric to supply $650 million of energy equipment and $350 million worth of railway machinery to Angola. This is likely to facilitate the African country to diversify its economy, which until now was dependant on crude oil production for over 95% of its export revenues.
Earlier, Ex-Im had financed a $600 million deal for TAAG Angola Airlines, the state-owned flag carrier of the country, to buy aircrafts from The Boeing Company (BA - Analyst Report) . With such big-ticket investments by blue-chip companies, the bank expects other firms will follow suit to infuse capital in major sectors like infrastructure, transport, mining and small businesses. This will further enable the U.S. to widen its economic ties with Angola beyond the oil sector, where leading U.S. firms like Chevron Corporation (CVX - Analyst Report) and Exxon Mobil Corporation (XOM - Analyst Report) have already established their footprint.
The Ex-Im contract supports General Electric’s recent focus on its industrial business as it aims to reduce credit risks by divesting its Retail Finance business. General Electric has also filed an initial public offering (IPO) of its North American consumer lending unit. The IPO is expected to be closed by late 2014. Subsequently, GE Capital Retail Finance will operate under the name “Synchrony Financial” and will trade on the New York Stock Exchange under the symbol SYF.
General Electric is one of the largest and the most diversified technology and financial services corporations in the world. With products and services ranging from aircraft engines, power generation, water processing, and security technology to medical imaging, business and consumer financing, media content, and industrial products, the company serves over 100 million customers worldwide. The segments of this Zacks Rank #3 (Hold) company include Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Home & Business Solutions, and GE Capital.