General Motors Co. is planning to sell its stake in Ally Financial Inc., the auto lender majority owned by U.S. taxpayers, a person with knowledge of the transaction told Bloomberg.
Selling now would allow GM to avoid a months-long lockup tied to Ally’s initial public offering, according to the person, who asked to remain anonymous because the deal isn’t public. The automaker also may seek to tap demand for Ally’s shares after the lender’s private placement that raised $1.3 billion earlier this year was oversubscribed, the person said. That deal diluted GM’s stake from about 9.9 percent to 8.5 percent, according to data from regulatory filings.
Ally, formerly known as GMAC, was once the in-house financing arm of GM. The pending sale was reported by The Wall Street Journal, which described the deal as a private placement valued at about $900 million.
GM’s stake is held indirectly in an independent trust, according to the automaker’s quarterly securities filing. The stake was required to be sold by Dec. 24 before the Federal Reserve granted a two-year extension in October.
Gina Proia, an Ally spokeswoman, and GM’s Tom Henderson said their companies had no comment on the sale.
Ally Financial Inc. and Wolters Kluwer Financial Services today (Sept. 9) announced that Ally has begun accepting recreation vehicle finance applications through Wolters Kluwer’s AppOne dealer portal. According to a press release, AppOne is a web-based platform that provides Ally and its RV dealer customers the opportunity to simplify both the credit application and contract preparation processes through an additional channel.
Additionally, Ally will offer dealers the ability to print finance contract documentation through the AppOne portal. This feature will be available in 22 states immediately with additional states to follow.
“We know that dealers want competitive rates, quick credit approvals and fast funding, and we plan to be aggressive on all of these fronts as we continually look for ways to increase the value we offer,” said Mark Manzo, Ally vice president, Alliance Sales. “Our presence on the AppOne dealer portal is one more example of how we’re listening to our dealers and focusing on their priorities.”
AppOne automates traditional processes at the dealership, which helps ensure that financing sources receive funding packages that meet their guidelines. The system helps improve the process for both financial sources and dealers by reducing the number of contracts held up for funding.
“We are committed to offering innovative technology and strategies to address the challenges dealers and financing sources face,” said Brad Fleener, senior director and general manager of Indirect Lending at Wolters Kluwer Financial Services. “Our solutions help both dealers and financing sources meet compliance and legal requirements while simplifying the end-to-end process. That means we can help Ally Financial meet the needs of their dealers as Ally builds its portfolio while also helping dealers focus on their retail customers.”
Ally Financial Inc. moved closer to repaying its government bailout as the lender reached agreement with creditors of its bankrupt mortgage unit.
Bloomberg reported that while financial terms of the accord weren’t included in a statement from Ally, the company said it will be insulated from private claims against its Residential Capital LLC mortgage arm, once ranked among of the largest originators of subprime mortgages. The sum will be kept confidential until next week when debtors are expected to formally support the plan in court, Ally said.
ResCap’s bankruptcy has been one of the biggest sticking points as Ally seeks to sell shares to the public and pay back a $17.2 billion bailout received during the global credit crisis. Ally CEO Michael Carpenter has been selling assets to raise money and reiterated this month that an initial stock offering would be the best option.
The accord is “a seminal moment for Ally” that will “put the issues related to the mortgage industry behind us,” Carpenter said in the statement. The company will be free to concentrate on auto finance, where Ally said last year it was ranked No. 1 in combined sales and leasing, and its online bank.
If approved, the agreement may head off the possibility that Ally must pay billions more than it budgeted to settle ResCap’s debts, including those tied to bad mortgage bonds. ResCap filed for bankruptcy last year as defaults soared and investors demanded refunds.
Ally Financial Inc., the auto lender 74 percent-owned by the U.S. government, swung to a third-quarter profit, helped by its strong auto-lending and mortgage businesses.
Reuters reported that the Detroit-based lender said it earned $384 million in the quarter, compared with a loss of $210 million a year earlier. Ally entered the RV lending market in June of 2010.
The company’s mortgage operations, excluding Residential Capital, reported a pre-tax income of $354 million, compared to just $13 million a year ago.
The residential capital mortgage unit filed for Chapter 11 bankruptcy protection on May 14 to insulate the parent company from mortgage liabilities.
U.S. automotive earning assets rose 21% in the quarter and net financing revenue was up 22% in the United States.
Ally, previously known as GMAC Financial, was once the auto lending arm of what is now General Motors Co.
The company received $17 billion in bailouts from the U.S. government during the financial crisis and has been selling assets to repay the money.
Ally Financial announces the addition of Bruce Jackson to the position of national sales director, according to a press release. He will report to Tim Russi, executive vice president, North American Auto Operations.
In this role, Jackson will be responsible for identifying growth opportunities to build the company’s diversified dealer relationships in the U.S. market. His duties also include expanding Ally’s business in the recreational vehicle market. Ed Arienti, Ally’s director, finance for the RV business will report to Jackson.
Prior to joining Ally, Jackson served as senior vice president, dealer financial services at Bank of America, a position held since 1997. He began his career in 1991 with Toyota Motor Credit Corporation in Houston.
“Bruce brings tremendous skills and expertise to the Ally Auto team,” said Tim Russi. “His experience in exceeding growth targets and building strong relationships throughout his career will allow us to continue accelerating our growth plans in our diversified channel.”
Forest River Inc., a leading RV manufacturer based in Elkhart, Ind., has selected Ally Financial as an additional provider for dealer inventory financing in the U.S. The agreement is effective immediately.
“Ally Financial is a proven financial services provider with nationwide scale for the U.S. RV industry, and we are pleased to develop this relationship for our dealer network,” said Joseph Greenlee, CFO for Forest River.
According to a press release, Ally Financial will participate in Forest River’s interest reimbursement program for RV dealers obtaining wholesale financing from Ally. Eligible dealers can receive an interest rebate from Forest River for units sold to retail customers within 90 days of invoice.
“We’re excited about the rebate program because it essentially speeds up the average turn time for inventory,” said Mark Manzo, vice president of Alliance Sales for Ally Financial. “That’s good for us and good for dealers, enhancing their business model.”
In addition to wholesale financing, Ally also offers RV dealers real estate and commercial loans, inventory insurance, remarketing services for RV trade-ins and consumer financing to support new and used RV sales.
“Forest River is a quality manufacturer that expects a world class financing experience with attractive terms,” said Mark Manzo, vice president of Alliance Sales for Ally Financial. “We have the infrastructure and capabilities to meet those needs, and Ally welcomes the opportunity to grow its RV portfolio while serving Forest River dealers and their customers.”
“Since we entered the RV finance business, our goal has been to provide a full gamut of services to the industry. Our focus ranges from smaller dealerships to the large, national retailers. Currently we have over 1,000 RV dealer relationships.”
Forest River, a Berkshire Hathaway company, currently has manufacturing in six states within the United States with more than 8,000 employees producing numerous brand names. The company sells to independent dealers in the United States and Canada.
“At Ally, we are committed to the RV market,” Manzo said. “Looking at the seasonality and flexibility in the wholesale market, we see this as an opportunity for us to grow our market share and help dealers grow sales.
The Vehicle Production Group LLC (VPG) selected Ally Financial as the preferred financing provider for its vehicles in the U.S. According to a press release, Ally Financial will offer wholesale financing, floorplan insurance and remarketing services for VPG dealers, as well as retail financing for their customers.
VPG introduced the MV-1 mobility vehicle in September 2011. It is the first factory-built mobility vehicle that is compliant with American Disabilities Act guidelines, designed and engineered for efficient wheelchair accessibility. The MV-1 is assembled by AM General LLC in Mishawaka, Ind., and is offered in several models, including a factory-direct compressed natural gas (CNG) fueling system.
VPG and Ally have entered into a multi-year agreement for the preferred provider financing relationship.
Mark Manzo, vice president of Alliance Sales at Ally Financial, said: “We are proud to add The Vehicle Production Group to our list of preferred clients. Our underwriting team stands ready to support MV-1 sales. The relationship with VPG will enable us to serve the growing population in need of mobility vehicles.”
According to the U.S. Census Bureau, 3.3 million people in the U.S. age 15 years and older used a wheelchair in 2010.
In the U.S., Ally Financial is currently the preferred financing provider for General Motors, Chrysler, Fiat, Maserati and Saab vehicles and Thor Industries Inc. The company finances both new and used vehicles, as well as offering insurance products and remarketing services for auto and RV dealers.
A year after adding wholesale floorplan financial services to its retail lending portfolio in the RV industry, Ally Financial Inc.’s dedicated sales force — for the second year in a row — exerted a strong presence at the Recreation Vehicle Industry Association’s (RVIA) National RV Trade Show in Louisville, Ky.
A bank holding company formerly known as GMAC Inc., Ally stepped into the RV market – an arena that some lenders had fled as the global economy sputtered – in June of 2010, convinced that the RV industry was underserved and that its clientele of lifestyle-oriented enthusiasts would yield consistent business growth as a niche business for years to come.
Now, the senior management of Ally — the world’s largest auto lender – reports that the Detroit-based firm has made appreciable inroads in the RV arena as it strives to position itself as a full-service company that works to “partner” with dealers and advise them in both good times and bad.
“We are a full spectrum lender — wholesale, retail, cap loans, mortgages,” says Mark Manzo, vice president of Alliance Sales. “A lot of lenders out there will do a good job at wholesale. Some will do a good job at retail. But we feel we have a full commitment to service the dealers in the RV industry on all their product segments, plus insurance as well as remarketing services.”
“We think bringing a whole suite of services is where our value proposition really shines,” Tim Russi, executive vice president for North American Operations, told RVBUSINESS.com. “While we launched in June 2010 on the retail side, last year we added our wholesale lending so we could start doing floorplan loans and other financing needs that dealers might have. As we approach the marketplace, we think that high value is added to the dealer. We want to sell as many products as we have available.”
In line with that full-spectrum approach, Ally is placing a special emphasis this winter on three basic services, the first of which is similar to programs Ally has offered before on the automotive side of the business.
“The first message we are pushing strongly right now is ADR – Ally Dealer Rewards — one of the things we launched this year,” says Manzo. “Nobody in the business has it. We launched it Nov. 1. The more business you do with us, the more we share in the rewards. For instance, once a dealer does a million dollars in retail business, we start to give a dividend back and will pay a dividend every month based on the new business. We also give a bigger reward if dealers wholesale with us.”
Ally’s also promoting an “Express” program, enabling dealers to send in an application from qualified buyers — mainly upper-prime buyers – without having to call in ahead of time for amounts of up to $125,000, and it can be used for product back to 2007. “Basically,” says Manzo, “what they do is check a list, meet the qualifications and send it in. We also give a rate discount off our standard rates for that.”
Another top-of-mind program for Ally is its “SmartAuction” online auction service, a dealer-exclusive wholesale online auction site.
“Nobody else in the industry has a focus on remarketing opportunities or alternative ways to handle used product like our online auction, where dealers can buy and sell used RVs,” explains Manzo. “They can also take a customer’s RV on consignment, put it on the SmartAuction and they don’t have to have it sitting on their lot.
“It’s pretty new to the industry,” he added. “Our biggest challenge is getting inventory on it. We are going to concentrate on helping dealers understand what it’s all about, and we are going to have a special promotion between now and March — no buy fee, no sell fee — so dealers can basically use SmartAuction for free.”
SmartAuction, Russi maintains, has the potential of increasing turns for many dealers. “If you (a dealer) make a mistake, you don’t have to live with it until someone walks onto your lot,” noted Russi. “You can get product to another dealer who may have a better opportunity to sell that individual piece.”
Contributing to the unique nature of SmartAuction, they add, is its dealer-only format and the ability for a retailer to flag – and be alerted about — specific types of units.
“The other thing that makes it unique is arbitration,” says Russi. “Often times with auction sites, especially online, if there’s a problem, dealers have to work it out with the buyer or the seller, depending on their position. We get in the middle and we handle that. Once they buy, they don’t have to negotiate. If there’s a problem, we get in and handle it and try to make it as hassle-free as possible.”
The former finance arm of General Motors said today (March 31) it is preparing an initial public offering as it seeks to repay billions in government aid received during the financial crisis, Associated Press reported.
Ally Financial Inc. said in a filing with the Securities and Exchange Commission that the IPO could raise up to $100 million, but the actual offering will likely be larger. The preliminary estimate of proceeds often changes closer to the IPO date as the offering is pitched to investors.
GM itself is an example of the possible change in amount: When it announced plans to go public to pay money back to the government after being bailed out, it also said it would sell up to $100 million worth of common stock in its initial filing. The IPO in November raised $23.1 billion.
“We’re talking about a number that could vary dramatically,” said Scott Sweet, a longtime analyst of IPOs and founder of IPO Boutique. “GM started at a number that wasn’t even remotely close to where it ended. That’s likely the same situation here.”
Ally will not receive any proceeds from the IPO.
Ally, formerly known as GMAC Inc., makes loans to GM customers and finances wholesale financing and retail financing for all RVs. The government first bailed out Detroit-based Ally in late 2008 as part of the Bush administration’s assistance to the U.S. auto industry. The Obama administration invested additional sums in May and December 2009.
In total, Ally received $17.2 billion in government support. It has already returned $4.9 billion through dividend payments and trust preferred securities sold earlier this month. The Treasury Department now owns 74% of Ally’s stock.
Ally did not say how many shares the government would sell in the IPO or when the offering would happen. Similarly, Treasury officials didn’t provide details about how much of its holdings would be sold initially or when the IPO might be held. The agency said in a statement that it supported Ally’s move to launch the IPO.
In addition to its holdings of common stock, Treasury also owns $5.9 billion in preferred stock, which are convertible into common stock. For the Treasury to break even on the $17.2 billion in support it provided Ally, it will have to sell the preferred stock for the $5.9 billion it is valued at and realize approximately $6.4 billion from the sale of the common stock.
Citi, Goldman Sachs, J.P. Morgan and Morgan Stanley are managing the IPO.
Ally Financial Inc., the U.S.-owned lender preparing for an initial public offering, is bolstering ties to General Motors Co. dealers amid signs the automaker may become a rival in vehicle financing, Bloomberg News reported.
CEO Michael Carpenter held dealer meetings in several cities and broke custom by scheduling a first-ever event at the National Automobile Dealers Association (NADA) in San Francisco this month that didn’t include executives of GM, the biggest U.S. car manufacturer, or Chrysler Group LLC, said Gina Proia, an Ally spokeswoman.
Ally, the biggest U.S. new-car lender, started as a GM unit and still gets most of its business through GM and Chrysler dealers. With an IPO in the works, Detroit-based Ally wants to assure investors those dealers will remain customers for years to come, said Maryann Keller, an auto industry analyst. GM is expanding its own finance operations, marked by last year’s $3.3 billion purchase of AmeriCredit Corp.
“The number one question Ally will have to answer on the roadshow is how they can go public if their number one customer is moving away from them,” said Keller, principal of a self- named consulting firm in Stamford, Conn. “They’re going to have to tell a story about what their business model is going to be.”
At stake for Ally is almost $23 billion in U.S. retail contracts as of last year on 803,000 new vehicles. Carpenter, 63, also faces encroachment from traditional lenders like Capital One Financial Corp., which caters mainly to retail customers, and JPMorgan Chase & Co., which is targeting dealers. That’s home turf for Ally, formerly known as GMAC Inc., the largest source of funds for GM dealers and customers such as Thor Industries Inc.
GM acquired AmeriCredit to help the automaker offer credit to more consumers, Dan Ammann, GM’s vice president of finance, said last year. Renamed General Motors Financial Co., the unit has expanded since the takeover and may increase loans to borrowers with lower credit scores.
GM Financial started a trial leasing program in Ohio late last year and expanded to seven states in the Northeast in January. GM may also challenge Ally’s hold on dealers by lending them cash to purchase inventory, said Duane Paddock, chairman of GM’s National Dealer Council. Ally dominates that business, providing “floor-plan” funds to 82% of GM dealers and 76% of Chrysler dealers, according to the lender.
“We have assumed that GM Financial would become a floor- plan source,” said Paddock, who owns a Chevrolet dealership in Kenmore, New York, and is co-chairman of the national dealer council’s finance committee. “GM said never say never, but certainly not today. It’s not going to happen any time soon.”
The automaker’s management also has debated buying all or part of Ally, a discussion that began before the AmeriCredit purchase, three people with knowledge of the discussions said in May. CFO Chris Liddell said in June that it doesn’t make sense to carry billions of dollars in lending assets on the automaker’s books.
There are no current talks about a sale between GM and the U.S. Treasury Department, which owns 73.8% of Ally after a series of bailouts totaling $17.2 billion, said two people with knowledge of the company’s plans. They declined to be identified because acquisitions are confidential. GM sold 51% of GMAC in 2006 for $7.4 billion to a group of investors led by Cerberus Capital Management. The bailouts have since diluted that stake to 7.8%. GM still controls about 9.9%.
Renee Rashid-Merem, GM’s spokeswoman, declined to comment, while Ally’s Proia said the relationship with GM “is an important and mutually beneficial strategic alliance.” Mark Paustenbach, a Treasury spokesman, said he couldn’t comment.
Other lenders are also making a push to expand their dealer business. JPMorgan has become more aggressive in lending for dealer inventory, said James Wood, who attended a meeting with Ally executives on Feb. 17 in Dallas and owns dealerships in Decatur and Denton, Texas. Capital One CEO Richard Fairbank said in a January earnings call that the McLean, Virginia-based lender has increased auto lending by “deepening dealer relationships.”
Mary Kay Bean, a spokeswoman for New York-based JPMorgan, declined to comment on whether the lender is increasing the financing or products it provides to GM and Chrysler dealers.
GM also offers leasing programs through U.S. Bancorp and in May 2010, Chrysler partnered with Santander Consumer USA, a division of Spain’s biggest bank, to offer loans to less creditworthy borrowers.
Laurie Kight, a spokeswoman for Santander Consumer USA, confirmed the company’s agreement with Chrysler and said the lender didn’t have similar agreements with other manufacturers.
The meeting at NADA, billed as the “automotive industry event of the year,” and the U.S. tour may mark Ally’s response to heightened competition, said Adam Steer, an analyst at New York-based CreditSights Inc. In the past year, Ally has also moved away from an almost total reliance on GM and Chrysler, expanding to serve Saab Automobile AB and Thor Industries Inc.
The shift at the San Francisco convention was having “our own meeting” to give everyone an update on the company as it sharpens its focus on auto lending, Proia said. In past years, Ally would have met with dealers in events hosted by automakers or other companies rather than hold its own, she said.
“The main motivation for doing this is to provide dealers specific information about Ally and what we are doing to support their business and show our commitment,” Proia said.
Ally made more new-car loans than any other lender last year, according to Experian Automotive, a Costa Mesa, Calif.-based firm that tracks auto-lending data. The company controlled about 38.2% of GM consumer loans and 45.4% for Chrysler at the end of 2010, according to a statement.
On the tour to meet dealers, Carpenter made the case that Ally’s status as a bank holding company will mean it can borrow money more cheaply than non-bank finance companies and finance the purchase of dealer inventory at lower rates, said Jim Hardick, co-owner of Moritz Chevrolet in Fort Worth, Texas, who attended the Dallas meeting.
The lender can finance dealer inventory at about 2.25%, said Tom Durant, owner of Classic Chevrolet in Grapevine, Texas. Before Ally became a bank holding company, GMAC loaned his dealership wholesale financing at 3.75%, Durant said.
“They’re trying to get the dealers on their side,” Durant said. “This has more to do with their IPO than it does with dealers.”