Ally Financial Inc. plans to offer auto dealers as much as 5 percent of the common shares issued as part of its initial public offering, according to a filing with the U.S. Securities and Exchange Commission.
The move will give auto dealers, Ally's primary customers, access to the lender's public stock offering, which is expected this summer. Ally, formerly GMAC, provides inventory financing to about 5,000 U.S. dealers, most of which represent General Motors and Chrysler Group brands.
Any shares remaining from the 5 percent reserve will be offered to the general public, Ally disclosed last week in an amended IPO prospectus with the SEC.
Ally did not disclose dealer eligibility requirements for the directed share program.
Ally spokeswoman Gina Proia declined to comment on the potential size or timing of the stock offering.
The Wall Street Journal, citing people close to the matter earlier this year, reported the U.S. Treasury hopes to sell about $5 billion of common stock as part of the offering.
Ally filed a prospectus to go public in late March. The U.S. government owns 73.8 percent of the lender. The shares would trade on the New York Stock Exchange under the symbol ALLY.
But since the filing, U.S. stock markets have retreated amid concerns about U.S. economic growth, posing an additional challenge to IPOs planned by Chrysler and Delphi Automotive.
Chrysler hinted last week it may skip an IPO altogether
At the time of the Ally IPO, the U.S. Treasury Department plans to convert $2.9 billion of its existing holding of $5.9 billion of preferred securities into common stock, Ally disclosed in May in an earlier amended IPO prospectus filing with the SEC.
The IPO will allow the U.S. government to begin recovering its $17.2 billion bailout of the lender. To date, the Treasury has recouped $2.7 billion of its investment by selling trust preferred securities that it held in Ally.
After the IPO, the U.S. government likely will have to sell its holdings over the course of months or years to be fully repaid.
The U.S. government rescued Ally as part of efforts to rescue GM and Chrysler. At the time of the federal bailout, Ally was majority-owned by Cerberus Capital Management, with GM retaining a 49 percent stake.
Today Cerberus has an 8.7 percent stake in Ally, and a GM trust owns 9.9 percent. A group of third-party investors controls the remaining 7.6 percent stake.