Ally Financial shares fall in debut as U.S. Treasury cuts stake
By Tanya Agrawal
(Reuters) - Shares of auto-lender Ally Financial Inc ALLY.N fell as much as 3.8 percent in their market debut on Thursday, taking the shine off the biggest U.S. IPO so far this year as investor appetite for big stock offerings shows signs of waning.
Ally also has issues of its own as it faces intensifying competition, analysts said. The U.S. Treasury, which bailed out the company during the 2008 financial crisis, also retains millions of shares that will eventually flood into the market.
Ally's offering raised $2.38 billion for the Treasury, giving the government a profit of $500 million so far on its $17.2 billion investment in the company.
The Treasury now has a stake of 17.1 percent in Ally, down from 36.8 percent before the IPO. This will fall to 14.1 percent if underwriters exercise an option to sell additional shares on behalf of the government.
Citigroup, Goldman Sachs, Morgan Stanley and Barclays were the lead underwriters.
The offering of 95 million shares was priced at $25 each, the low end of the expected price range of $25-$28. At the offer price, Ally was valued at about $12 billion.
"Treasury will continue to evaluate exit strategies for its remaining Ally investment ... as soon as practicable, and in a way that maximizes taxpayer value," the department said in a statement on Wednesday. (link.reuters.com/mup48v)
Timing will be key. Analysts have said that investors are becoming more selective after a flood of stock offerings this year. In this week alone, more than a dozen companies have either gone public or will make their market debuts by Friday, marking the busiest week for IPOs since 2007. Continued...