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Best Transaction Management Solution Winner: GE HealthCare Technologies Inc

Published: Aug 2023
Photo of Niraj Mandpe, John O’Connor, J.P. Morgan, Aman Bhutani and Max Jessernigg, GE HealthCare Technologies Inc.

Photo of Niraj Mandpe, John O’Connor, J.P. Morgan, Aman Bhutani and Max Jessernigg, GE HealthCare Technologies Inc.

Shreeram Lakshmanan

Regional Treasury Director – USCAN
GE HealthCare logo

GE HealthCare is a leading global medical technology, pharmaceutical diagnostics, and digital solutions innovator, dedicated to providing integrated solutions, services, and data analytics to make hospitals more efficient, clinicians more effective, therapies more precise, and patients healthier and happier. It is a global business, serving more than one billion patients annually and US$18bn in annual revenue.

in partnership with

J.P. Morgan logo

GE spin off GE HealthCare’s wins with cash pooling solution

The challenge

In November 2021, American multinational conglomerate GE made the decision to split into three divisions focused on healthcare, aviation and energy transition. The impending spin-off presented liquidity management challenges, particularly cash extraction and bringing GE HealthCare to a level of cash required to successfully spin-off. The new company also needed to create accurate forecasting to ensure it had the right mechanisms to manage its cash needs. This meant a new system to consolidate cash effectively and reduce fragmented cash, especially in markets with underdeveloped banking and regulatory challenges.

GE HealthCare operates out of 70+ countries, in 60+ currencies. The cash the business had to work with was spread across all these countries, currencies and 200+ legal entities. It was critical that the business had a highly robust mechanism of consolidating cash in each of the regions, and clear visibility at HQ over its many different international sources of cash.

The challenge was made more complicated by a short timeframe in which to achieve the necessary results. There was just a ten-month window in which to get the planning, implementation and execution achieved – with the eyes of global markets, media and investors watching this high-profile transaction.

The solution

To consolidate and streamline the multiple entities, countries and currencies, GE HealthCare created a regional multi-currency notional pool in Europe and a US dollar physical pool in North America. Partnering with J.P. Morgan, the company also set up a regional treasury centre in Singapore, with another notional pool to facilitate consolidation of cash in Asia. Under the solution, three pools interact with each other following time zones: in Asia, the cumulative cash position consolidated at the end of the day sweeps into the European pool which then sweeps into the US pool.

The US ends up with the fully consolidated global cash of the business, with any excess cash being invested. This structure allows the company to optimise its operational liquidity.

Making as much company cash accessible and available to GE HealthCare’s HQ from day one of the company spin-off was the ultimate objective. However, certain countries such as India and China have limitations around cash extraction due to exchange control regulations. This required an efficient mechanism in line with the prescribed regulatory guidance. For example, in China intercompany loans were setup, through which GE HealthCare was able to consolidate the cash in a short-term basis.

Best practice and innovation

A standout outcome of the pooling solution manifests in GE HealthCare being able to self-fund to meet its working capital needs. Funds have been available from early January 2023 when the company officially separated from GE after listing on the NASDAQ.

GE HealthCare’s forecasting process tracks rolling two-week and 13-week cash flows to ensure the cash position is monitored and understood at a granular level. This process highlights available vs unavailable pockets of cash, tracks liquidity needs over time and assesses the potential need to draw on working capital lines well in advance.

Thanks to the pooling system and advisory support of the company’s banking partner, the cash needs of the business – both at a central HQ and international level – are being monitored and met. This consolidation means pockets of otherwise unavailable cash are being utilised to meet the needs of the company, which is funding itself through globally generated cash.

“We’re excited and thrilled for this recognition so early in our journey as a standalone company. We look at this as a start, demonstrating the passion and expertise put in by our team to building a world-class treasury organisation.”

Shreeram Lakshmanan, Regional Treasury Director – USCAN

Key benefits

  • Cost savings.

  • Return on investment (ROI).

  • Process efficiencies.

  • Risk mitigation.

The hallmark of a good spin-off is the ability for the newly separated company to function independently and meet its own needs from day one of operation. Thanks to this solution, treasury operations of the newly minted GE HealthCare sprung into action at the launch of the separate entity.

The mechanisms and structures put into place ensured that on day one, GE HealthCare could focus on the monumental task of going live with a new business and preparing for a stock exchange listing.

GE Corporation has also been awarded Highly Commended Winner in our Top Treasury Team solution category.

Lori Schwartz

Managing Director, Global Head of Liquidity & Account Solutions, J.P. Morgan Payments

GE HealthCare treasury’s journey has been nothing but inspirational. Faced with an impending spinoff from GE, it set up global liquidity structures to consolidate cash in a short timeframe providing clear visibility at HQ, in terms of cost savings and process efficiency with risk mitigation. The company has self-funded working capital from day one, a hallmark of a good spin-off. Further, these structures supported two acquisitions within three months of NASDAQ listing. This is extremely unique and powerful, as we see working capital funding acquisitions for in-organic business growth. Congratulations to the team for going above and beyond!

in partnership with

J.P. Morgan logo

The Adam Smith Awards is the industry benchmark for best practice and innovation in corporate treasury. The 2023 awards attracted 320 nominations spanning 34 countries. To find out more please visit: treasurytoday.com/adam-smith-awards.

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