Ally Financial raises $2.38 billion from IPO

Article by Christian Andrei, on April 11, 2014

Ally Financial Inc. has raised $2.38 billion in its initial public offering, pricing its stock at the lower limit of the proposed range. During the IPO, the United States Treasury Department was able to sell 95 million shares for $25 apiece, according to data compiled by Bloomberg. Ally’s shares will start trading in April 10 and is listed on the New York Stock Exchange under the symbol ALLY.

Ally -- which was rescued by the US government during the 2008 financial crisis -- originally filed to go public in March 2011 as it tried repay back the remainder of the bailout that had already bloated to $17.2 billion. Ally chief executive Michael Carpenter has shifted the lender’s focus back on its auto-lending after its struggling mortgage business collapse.

According to Ally’s prospectus, the IPO should trim the US Treasury’s 37 percent stake to around 17 percent. Treasury had owned up to 74 percent of Ally following the 2011 bailout. The IPO and repayment will lead to the lifting some regulatory restrictions that came with the bailout and will give Ally more freedom to take on more risk that could boost profitability.

Ally’s timing of the IPO came at a time when the stock market is recently experiencing some volatility. The Standard & Poor’s Financial Sector Index fell 2.6 percent through April 8 after reaching a five-year high on April 2.

Ally is facing as carmakers like General Motors and Toyota are hounded by recall crisis. Prior to the IPO, the Treasury had disclosed that it has already recovered $15.3 billion of the total bailout amount provided to Ally.

Topics: ally financial, ipo

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