General Motors has announced that it will be selling off its remaining stake in Ally Financial. The auto lender, formerly General Motors’ financial lending branch called GMAC, is currently majority owned by US Taxpayers.
The timing of the sale comes ahead of Ally’s planned initial public offering. Selling off their share before this happens would make sure that the General Motors avoids getting stuck in what could be a months long delay if it were to attempt the sale after the offering.
General Motors may also be looking to take advantage of a demand for Ally’s shares that was left unfilled after a private placement earlier this year. That raised $1.3 billion and was actually over-subscribed so there’s likely still demand for shares out there just looking for an opportunity to be filled. That private placement diluted General Motors’ total stake in Ally from 9% down to 8.5% according to official filings.
The sale of that remaining 8.5% stake is currently pending approval and would be worth an estimated $900 million total. The majority stake that is owned by the US taxpayers is still a far greater percentage at 64% as of November 20th. Ally has already repaid roughly two-thirds of the original $17.2 billion bailout that it received from the US government.
Back in 2006, General Motors sold off the first large chunk of its stake in Ally Financial. That sale amounted to $7.5 billion and was sold to a group of investors as well as Cerberus Capital Management. Cerberus still currently own 8.7% of the company.
What General Motors does still own is being held in an independent trust. They were originally required to sell it all off by December 24th, but the US Reserve granted them an extension back in October. This would give General Motors an additional two years to sell off the remainder of their stake in Ally.
Nicole Wakelin fell in love with cars as a teenager when she got to go for a ride in a Ferrari. It was red and it was fast and that was all that mattered. Game over. She considers things a bit more carefully now, but still has a weakness for fast, beautiful cars. Nicole also writes for NerdApproved and GeekMom.