General Motors Co. plans to sell its holdings in Ally Financial Inc., a person privy with the matter transaction told Bloomberg. A move to sell its stake would enable GM to avoid a months-long lockup connected to Ally’s initial public offering, according to the person. The US carmaker may also seek to tap demand for Ally’s shares following the lender’s private placement earlier this year that was oversubscribed, the source said.
That deal effectively diluted GM’s stake at Ally from about 9.9 percent to 8.5 percent, according to data from regulatory filings. The latest plan by GM to sell its Ally stake was described by The Wall Street Journal as a private placement valued at about $900 million.
GM's stake in Ally is held indirectly through an independent trust, according to the carmaker’s quarterly securities filing. It was required to be divested by Dec. 24, 2013 before the Federal Reserve granted a two-year extension in October. Ally has been rebuilding its finance business since selling a controlling stake in GMAC to Cerberus Capital Management in 2006.
GM agreed to pay $4.2 billion for Ally's auto lending operations in Europe and Latin America as it aims to expand its in-house financing at its GM Financial unit. In November, Ally repurchased $5.9 billion worth of its shares from the US Treasury and has repaid over 70 percent of the total bailout given by the US government, pegged at $17.2 billion.