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article imageUS Treasury sets IPO for Ally Financial

By AFP     Apr 9, 2014 in Business

The US Treasury Department announced plans Wednesday for Ally Financial to raise $2.375 billion in a market debut as it winds down its rescue of the big bank.

Ally Financial is scheduled to make its initial public offering Thursday on the New York Stock Exchange, trading under the symbol "ALLY."

The Treasury is putting up 95 million shares it holds in Ally, priced at $25 a share, in the IPO.

After the closing of the offering, the Treasury will hold approximately 17 percent of Ally common stock, compared with roughly 37 percent before the IPO.

With this IPO, the largest of the year to date in the United States, the federal government will have recouped $17.7 billion, or $500 million more than it had spent to prop up Ally, formerly GMAC, or General Motors Acceptance Corporation, as the government rescued the automaker during the 2008 financial crisis.

"Taxpayers' investment in Ally -- together with the broader auto rescue -- helped protect the economy by avoiding a catastrophic and disorderly collapse of the American auto industry," Treasury Under Secretary Mary Miller said in a statement.

"With this offering, taxpayers have now recovered more than they invested in Ally."

The restructured Ally has been on the road to recovery over the past four years. In the fourth quarter of 2013, the company raised capital and was granted financial holding company status by the Federal Reserve, allowing the company to pursue a broader range of business activities.

The Ally IPO is part of the Treasury's effort to wind down the Troubled Asset Relief Program that was used to support the financial sector, automakers and the housing market in the crisis.

The Treasury said it would continue to evaluate exit strategies for its remaining Ally investment and wind down TARP as soon as possible "and in a way that maximizes taxpayer value."

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