Ally Financial, which controls the nation's fifth largest mortgage banking firm, plans to go public this year and is interviewing investment bankers for its initial public offering, according to sources familiar with the plan.Two underwriters that Ally has spoken with include JPMorgan Chase and Goldman Sachs.
A few weeks ago the U.S. Treasury converted $5.5 billion of GMAC preferred stock it owns into common. The move increased Treasury's stake in Ally's common to 73.8% from 56.3% at Dec. 29.
A spokesman for the company declined to discuss any issues tied to an IPO but investment bankers and advisors believe Treasury is pressuring the bank holding company to go public this year, the sooner the better.
The mortgage division, Residential Capital Corp., which also uses the trade name GMAC Mortgage, has struck mortgage buyback liability deals with Fannie Mae and Freddie Mac, and is talking to other secondary market investors about similar claims.
"They want to clear the decks for the IPO," said one advisor, requesting his name not be used.
To date, Ally Financial (formerly known as GMAC ) has received $16 billion in aid through the government's Troubled Asset Relief Program. Without it, the company would've failed.
After the federal government, Ally's largest shareholder is hedge fund giant Cerberus Capital Corp., which controls 8.9% of the common. Prior to the Treasury Department's conversion of preferred, Cerberus owned 14.9% of the company.
According to National Mortgage News and the Quarterly Data Report, ResCap ranked fifth among all residential funders in 3Q10 with $20.17 billion in production. It ranks fifth in servicing with $383 billion of housing receivables.