WASHINGTON – The Treasury Department has raised $2.38 billion after selling a large chunk of its stock in Ally Financial Inc. as part of the government’s ongoing effort to recoup the billions of dollars spent bailing out companies during the 2008 financial crisis.
Treasury said Wednesday that it got $25 each for the 95 million shares it sold in an initial public offering. The pricing of the IPO came at the low end of the forecast range of $25 to $28 per share.
The sale brought the amount it has recouped from the bailout of Ally to $17.7 billion, slightly more than the $17.2 billion the government had put up.
The Detroit-based former financing arm of General Motors ran into trouble by making bad bets on subprime mortgages.
With the stock sale, the government’s ownership of Ally’s common stock will drop from 37 per cent to about 17 per cent. Further sales of government-owned stock are expected in coming months.
In addition to the 95 million shares of Ally sold, Treasury has granted the underwriters of the sale a 30-day option to buy an additional 14.25 million shares at the $25 initial public offering price.
Ally’s stock is expected to begin trading on the New York Stock Exchange on Thursday under the ticker symbol “ALLY.”
“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 Undersecretary Mary Miller said in a statement.
The government sold its final shares of General Motors in December, recovering $39 billion of the $49.5 billion it spent to save the distressed automaker at the height of the financial crisis five years ago.
While the government ended up losing $10.5 billion in the effort to save GM, the Obama administration contended that the country could have lost a million jobs without the GM bailout.