Exclusive: Ally targets March IPO to raise up to $4.5 billion, government exit

Fri Feb 21, 2014 12:47pm EST
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By Paritosh Bansal and Olivia Oran

(Reuters) - Ally Financial Inc is hoping for an initial public offering of as much as $4.5 billion next month, sources familiar with the matter said, in a deal that would allow the U.S. government to make a profit on its crisis-era bailout of the auto lender.

Only the U.S. Treasury Department, which owns 37 percent of the former General Motors Co unit, is expected to sell stock in the IPO.

Both the government and Ally are hoping it would be able to sell the stake in one go, which would translate to a roughly $4.5 billion IPO at the valuations being considered, the sources said.

At the very least, Ally is expecting the U.S. government will be able to sell $2 billion worth of stock in the IPO, which is roughly the money that the company still owes Treasury.

The sources said that while March is the preferred month for the sale, the size and timing of the offering have not been finalized and will depend on market conditions.

A successful IPO would see the last of the major banks repaying taxpayers for its crisis-era rescue and mark an important milestone in Ally's multi-year turnaround effort.

It would also add to the gains the government has recorded so far from the Troubled Asset Relief Program, which was its main vehicle to rescue the nation's banks. Last month, Treasury said it had recovered about $436 billion compared to the $422.2 billion disbursed under TARP.

A Treasury spokesman declined to comment.   Continued...

An Ally Financial sign is seen on a building in Charlotte, North Carolina May 1, 2012. REUTERS/Chris Keane