The U.S. Treasury Department has had Ally Financial Inc. in a regulatory headlock since its 2008 bailout. As the government sells shares in an initial public offering, Ally will soon breathe again — and take on more risk.
Automotive News reported that the Treasury’s exit will let Ally make more auto loans to borrowers with lower credit scores from its commercial bank unit, according to a prospectus issued last month. The Detroit lender run by CEO Michael Carpenter is set to price its shares today (April 9) and could raise as much as $2.7 billion.
“Once the IPO is completed and the U.S. government has been repaid, the company will have more wherewithal to grow Ally Bank and enhance its profitability,” said Mark Palmer, an analyst at BTIG LLC in New York.
Ally, whose biggest shareholders also include Third Point LLC, the hedge fund run by Daniel Loeb, counted 16,000 U.S. car dealerships as customers at year-end, the filing showed. Ally securitizes dealer loans for sale to institutional investors.
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