Ally files for IPO that could raise more than $3B

Published on NewsOK Modified: March 27, 2014 at 2:30 pm •  Published: March 27, 2014
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MINNEAPOLIS (AP) — The federal government is getting ready to sell more than half of its remaining stock in Ally Financial in a public offering that might raise enough money to pay back the rest of its taxpayer bailout.

The sale could raise as much as $3.06 billion. That plus the $15.3 billion the government has already recouped would make taxpayers whole for the $17.2 billion bailout that began in 2008.

However, whether or not that happens will be determined by investor appetite for owning part of a company that is still shoring up its finances.

Ally was known as GMAC Inc. at the time of its bailout during the financial crisis. The company had been the auto lending arm for General Motors. But it was nearly wrecked by bad subprime mortgages made by its Residential Capital unit.

Last May, Ally cut ties to ResCap when the subsidiary filed for bankruptcy protection. Its assets were auctioned for $3 billion in October.

Ally has also been selling off auto finance operations in Canada, Mexico, and overseas. The sales and ResCap move have transformed Ally into a company mostly focused on U.S. auto lending and banking.

Ally doesn't have a network of bank branches. To get money to lend out, it offers certificates of deposit and also takes portions of deposits that are pooled by other financial institutions. Its $8.2 billion in so-called brokered deposits at the end of the year amounted to 18 percent of its total deposits. One of Ally's risks is that rising interest rates could make those harder to get, the company said in its Securities and Exchange Commission filing on Thursday.