Shares fall 4% on first day

Ally raises $2.38 billion in IPO priced at $25 a share

Shares fall 4% on first day

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NEW YORK (Bloomberg) -- Ally Financial Inc., the auto lender rescued by the U.S. government during the 2008 financial crisis, raised $2.38 billion in its initial public offering after pricing the shares at the bottom of the proposed range.

The U.S. Treasury Department, Ally’s majority shareholder, sold 95 million shares for $25 apiece, according to data compiled by Bloomberg. The shares, listed on the New York Stock Exchange under the symbol ALLY, fell 4 percent today to close at $23.98.

The IPO marks the end of a three-year process for Detroit-based Ally, which originally filed to go public in March 2011 as it sought to pay back the remainder of the U.S. bailout that swelled to $17.2 billion. Ally CEO Michael Carpenter has refocused the company on its auto-lending roots after the money-losing mortgage business went bankrupt.

U.S. Treasury will pare its stake in Ally to about 17 percent through the IPO from about 37 percent, according to the prospectus. Treasury owned as much as 74 percent of the company after the bailout.

The offering and repayment to taxpayers will lift some of the added regulatory restrictions that came with the government’s aid and allow Ally to take on more risk that could boost profitability.

While the auto lender is going public following the best year for U.S. initial public offerings since the financial crisis, recent stock-market volatility may affect the shares. The Standard & Poor’s Financial Sector Index slipped 2.6 percent through yesterday after reaching a five-year high on April 2. Ally, the former subsidiary of General Motors, also faces challenges as carmakers including GM and Toyota Motor Corp. face setbacks related to product recalls.

Holding company

Third Point LLC, the hedge-fund firm led by billionaire Daniel Loeb, said in January that it amassed a 9.5 percent stake, making it one of Ally’s largest shareholders. Affiliates of Cerberus Capital Management LP -- which led the buyout of GMAC, as it was known when it was the finance arm of GM -- owns 8.6 percent, according to a March 27 filing.

Ally won Federal Reserve approval to become a bank holding company in December 2008, enabling it to tap the U.S. rescue. Treasury said in a statement that it’s recouped $15.3 billion of the total, not counting the IPO.

Treasury had planned to offer 95 million shares for $25 to $28, according to a regulatory filing last month.

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