GENERAL Electric Co.’s plan to spin off energy units into a standalone company could attract investors looking for a well-known name in renewables if they can overlook legacy fossil-fuel operations, financial experts said. Earlier Tuesday, the 129-year-old U.S. conglomerate outlined a plan to split into three publicly traded companies focused on energy, health care and aviation. The energy unit will combine existing wind and gas-fired power turbines and services, and software businesses. The spinoff would be complete in 2024, General Electric (GE) said. “Customers need GE at its best and at its most focused to help them navigate the energy transition,” CEO Larry Culp said, referring to utilities and others now moving to solar, wind and hydropower. The plan echoes that of GE rival Siemens AG, which in 2020 spun off its power division to form Siemens Energy. It is also similar to electric utilities Enel and Iberdrola’s embrace of renewable power over fossil fuels. For GE, the divestment could unlock value from component businesses and be welcomed by investors valuing pure-play companies over conglomerates, said Dan Pickering, chief investment officer of financial services firm Pickering Energy Partners. “Investors will welcome a known franchise,” said Pickering. The GE energy unit’s size and reputation will make the spinoff “a meaningful and credible player in the business,” he said. Colin Scarola, an equity analyst at investment firm CFRA Research, said that the spinoff could lead to “value creation” in businesses that “in aggregate have been shrinking and losing money both before and since the pandemic.” The energy business would encompass equipment and services for gas, coal and wind turbines, hydro, nuclear and electric power generation. And it would include renewables and digital software operations. Servicing coal-fired power plants, classified as steam, will be an issue for some investors. “We’d like to see some resolution for what they’re going to do with their steam business,” said Matt Breidert, managing director for energy transition investing at fund manager Ecofin. GE, he said, needs “to be a market leader in sustainability, and they’re not there yet.” Another hurdle is the loss-making renewables business, which includes wind turbines. That unit has not achieved an annual profit since 2018, and posted a third-quarter loss of US$151 million, compared with a US$204 million profit in GE’s power group which includes gas turbines. (SD-Agencies) | 