Ally Financial Inc., the auto lender bailed out by the U.S. government, may start a road show for an initial public offering as soon as this quarter as the U.S. Treasury looks to shed its ownership, according to its chief executive officer.
The Treasury Department is likely to sell its remaining 37 percent stake in the Detroit-based auto lender and online bank by the end of 2014, CEO Michael Carpenter said yesterday in an interview in New Orleans.
“It’s really up to Treasury in terms of how they exit,” Carpenter said. “Chances are the Treasury won’t be the shareholder by the end of the year.”
If there’s a decision to go through with an IPO, Carpenter said, he thinks the road show would be in the first quarter or early in the second quarter.
“It certainly would be in the first half,” he said. “The chances are we will do an IPO, the chances are it will happen sooner rather than later.”
The U.S. Treasury pushed closer to exiting its bailout of Ally this month with a deal to sell about $3 billion in common stock to private investors, trimming taxpayers’ stake. The U.S. holding was reduced to 64 percent in November from 74 percent in a prior transaction.
Treasury Department spokesman Anthony Coley declined today to offer a specific deadline for when the sale might be completed. Coley cited a Jan. 16 statement by the department, which said, “Treasury will continue to exit the remaining investments in a manner that balances maximizing the taxpayer’s return on investments with the speed of our exit.”
After the sale, the U.S. will have recouped about $15.3 billion, or 89 percent, of the bailout Ally received as part of the Treasury’s Troubled Asset Relief Program, according to the Jan. 16 statement. The U.S. will have recovered about $435.8 billion on all of its TARP investments, more than the $422.2 billion disbursed under the program, Treasury said.
Ally filed for a $100 million IPO in March 2011. In February 2012, Carpenter said the company wouldn’t go public until more issues tied to faulty loans were resolved. Known as GMAC when it was the finance arm of the automaker that’s now called General Motors Co., Ally won Federal Reserve approval to become a bank holding company in December 2008. The change enabled it to tap a U.S. rescue that swelled to $17.2 billion.
Burdened by shoddy subprime mortgages, Ally had begun reporting losses in 2007 that reached $10.3 billion in 2009. With the firm on the brink of failure, the U.S. engineered a rescue to ensure money kept flowing to the auto industry and preserve jobs.
GM became the symbol of the controversial auto bailout with about $50 billion in assistance received from the Troubled Asset Relief Program. The Treasury sold its remaining stake in GM last month, losing about $10.5 billion on the investment.
“We’re really the last investment of any significance in the TARP program,” Carpenter said. “We have to be the only one in the auto sector they’ll make money on.”
Still, optimism for GM has been building for the past year after Treasury began unwinding its stake. GM, which will probably report its 16th straight quarterly profit next month, is benefiting from 18 new or refreshed vehicles introduced last year in the U.S. as the automaker rebounds from its 2009 government-backed bankruptcy reorganization.
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