General Electric Company (NYSE:GE) Undergoing Three-Part Transformation

June 28, 2016

Co-Group Head Nick Heymann of William Blair & Company has an “outperform” rating on General Electric Company (NYSE:GE) on the basis that the company is undergoing what he calls a three-part transformation.

The first is largely now reflected in GE’s share price, and that’s the company’s almost complete exit from their financial service business.

The second is the digitization of the company and the ability to now create a fourth avenue for growth that has never previously existed for industrials: the ability to create value from information. Up to now, industrial companies typically grew from selling their products, from long-term service agreements if they have an installed base, and most recently from software to optimize the performance of their installed base products.

Finally for GE there is a third element, which still has yet to become fully evident, which is the ability of GE to be one of a handful of companies that is able to successfully grow in the last frontier of the global economy: undeveloped economies. These countries’ needs right now are not for finished industrial goods per se, because they don’t have the requisite aftermarket and distribution and service and support, but rather for base infrastructure. The demand is very high, but historically the impediment has been adequate finances to afford the base infrastructure to modernize their economies.

So GE has been working to help coordinate structuring project finance with equity and debt from sovereign wealth funds and insurance companies around the world to really unlock and redirect capital to be able to bring what’s approximately a third of the world’s population into the 21st century.

Nick Heymann