GE Plans to Sell Genworth Financial Shares, Cut Stake

General Electric Co. on Monday said it would sell up to 82 million shares of Genworth Financial Inc., cutting GE’s stake to 51% from 70% in the insurer that it spun off last year.

The secondary offering is part of GE’s ongoing plan to pare back its insurance business in favor of consumer and commercial finance, which offer better returns on capital.

GE said it would use proceeds from its sales to eliminate “parent-supported” debt at GE Capital, allowing that unit to increase the dividend it pays GE to 40% of its earnings from the current 10% from the second quarter.

Credit Suisse First Boston analyst Nicole Parent, who has an “outperform” rating on GE, said the Genworth offering could come as early as next week.

“We believe this is an important catalyst for the stock given that the proceeds will be used to pay down parent-support debt sooner than expected,” Parent wrote in a note to clients.

At Genworth’s current share price, 82 million common shares of the insurer would be worth $2.4 billion.

In addition to the secondary offering, Genworth would buy $400 million to $500 million of Genworth class B shares directly from GE at the net price of the secondary offering, the company said.

The industrial, financial and media giant held about $4 billion of its financial unit’s debt on the parent company’s books in 2004, but plans to eliminate those liabilities this year.

Shares of Genworth rose 55 cents to $29.30 on Monday on the New York Stock Exchange, where GE shares closed up a penny higher at $36.13.

GE plans to sell the shares through a secondary public offering and a sale to Citigroup Global Markets Inc.