Ally Financial Inc., the former General Motors finance arm that had to be bailed out by the U.S. government, is meeting with investment bankers this week to pick a team to handle an initial public stock offering, a person briefed on the matter said Wednesday.
The government now owns 74 percent of Ally because of a $17.2 billion bailout during the financial crisis, and the government wants to get at least part of its money back through a public stock sale.
Large investment banks are making pitches to get Ally's business on Wednesday and Thursday in New York, according to the person, who asked not to be identified because the plans have not been made public. Bankers will make suggestions on the size and timing of the offer, and several are likely to be selected as underwriters, the person said.
Cable news channel CNBC reported Wednesday that the Ally IPO would be in the range of $5 billion to $10 billion.
An Ally spokeswoman and a Treasury Department spokesman would not comment on an IPO.
In December the Treasury Department took a step toward setting up Ally's stock offering by converting about a third of its stake in the lender from preferred securities to common stock. The conversion, designed to make it easier for the government to sell its stake, raised the Treasury Department's ownership from 56 percent to 74 percent.
Ally, formerly GMAC, still makes loans to GM customers and finances dealer inventories. The government first bailed out the company 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.
The Treasury said Ally has made substantial progress in restructuring. But in January a congressional oversight panel criticized what it called Treasury's "hands off" approach toward Ally for not always asserting its influence on the timing of an eventual IPO. The department also declined to block GM's purchase of Texas-based AmeriCredit, even though that finance firm may end up competing against Ally, the panel said.
Ally's moves toward a stock offering come after several successes in the IPO market. GM, which also received government aid, and TV ratings and consumer research company Nielsen Holdings B.V. each recently have had successful stock sales.
Insurance and financial giant American International Group Inc., another company bailed out by the government, also is moving toward an IPO in an effort to repay government bailout money.
AIG was one of the financial companies hardest hit by the credit crisis and received the largest bailout the government doled out. Its bailout package enabled it to tap as much as $180 billion in aid. The government received an 80 percent stake in the company as part of the deal.
© Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.