General Electric Company (NYSE: GE) recently confirmed that it is interested to make an investment worth around $2 billion in Nigeria railway concession project. Currently, GE is already negotiating with the government to expand its presence in the railway sector of Nigeria, which would be advantageous for the two parties.
This recent news was unsurprising for General Electric investors as the conglomerate has been offloading its financial assets and growing its industrial assets in order to minimize the risks associated with financial market volatility. GE has been successfully pushing through with its long-term strategy and has already shed the majority of its GE Capital assets all over the globe. At the same time, the company has also been investing in railway, energy, renewable energy, and healthcare initiatives.
As part of the negotiations of the conglomerate with the government of Nigeria, President Muhammadu Buhari already broadcasted in the early part of October that General Electric might pump in approximately $2.2 billion for the management of the railway project. Until now, the GE has not yet confirmed this news.
General Electric stated, “Given the size and scope of the proposed project, it is likely that the debt and equity commitments required from lenders, consortium partners and other co-developers will be in the range of $2 billion or more.”
The present deal of the Nigerian government with the multinational company would add to the existing agreements that Nigeria inked in order to revamp the country’s railway sector. In addition, the Nigerian government also signed two agreements with China Civil Engineering Construction Corp (CCECC), which is worth about $5 billion for the modernization of the railways in different parts of Nigeria.
This recent deal would bolster the General Electric Transportation segment, which posted revenues of $1.24 billion for the second quarter of the current fiscal year. Yet, the Transportation unit was one of the segments that registered revenue declines on a year-over-year basis during the Q2 of fiscal year 2016 because of the weakness in the industry.
Nigeria also experienced recession after the slump in the prices of crude oil and has also been attempting to recover at present.
As of the time of writing, the stock of General Electric is changing hands at $28.92, up by 0.21 percent or 0.06 points.