Tag Archive | "IPO"

Ally CEO Expects IPO in Late 2011

Ally Financial Inc. is on track to launch a public stock offering late next year, and reported a net profit of $565 million in the second quarter on higher revenue and better operating results, The Detroit News reported.

Ally CEO Michael Carpenter, who took over in November, said Tuesday the Detroit-based bank holding company and auto and mortgage lender was on track to go public in the latter part of 2011.

In an interview, Carpenter said the company would be “solidly profitable” in the second half of 2010, but said the profits might not be as “ebullient” as those in the first half.

He said a successful IPO for General Motors Co., due by year’s end, “would really set the stage for us.”

The government infused $17.2 billion into Ally and owns a 56.3 percent majority stake. The most recent government estimate is taxpayers will lose $6.2 billion on their bailout of Ally.

Carpenter said Ally, which until recently was known as GMAC, was steadily removing more risky assets from its books and was performing ahead of plan.

Since 2007, Ally has recorded $14.5 billion in losses from its portfolio of residential mortgages — once as high as $125 billion.

By year’s end, Ally should have no more than $10 billion in mortgages, representing more than 15 percent of its balance sheet.

Those assets are much less risky than in the past, and its ResCap unit made a profit in the second quarter. But what Ally must decide is whether it remains in the mortgage origination business.

In the first half of 2010, Ally earned nearly $730 million, compared with a $4.6 billion loss in the first six months of last year.

The company is the primary lender to General Motors Co. and Chrysler Group LLC. It underwrote 60 percent of Chrysler’s retail sales in June.

Carpenter told analysts and reporters on a conference call that the company’s success was based on auto dealers opting to use it for financing.

“The dealers determine our success — not the (automakers),” Carpenter said. He added that “GM and Chrysler are our partners.”

He noted that while some banks are re-entering the auto lending business, “they fled the sinking ship as fast as they could” during the credit crisis.

Carpenter said 1,400 Chrysler dealers wouldn’t be in business if Ally hadn’t stuck by them.

“The dealers would have gone out of business — and they know that,” Carpenter said. “We are not a bank where this is a product line that’s sometime in favor. … We’re there in the good times and bad for dealers.”

But GM has announced plans to acquire a subprime lender, AmeriCredit, for $3.5 billion, and Chrysler Financial, which has been in wind-down, is considering returning to new lending. Some auto analysts think GM could eventually use AmeriCredit like GMAC was for nearly 90 years: its captive finance arm.

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GM Plans to File for IPO During Week of Aug. 16

NEW YORK – General Motors Co. plans to file its registration for an initial public offering during the week of August 16, just after the expected date for its second quarter results, two people with direct knowledge of the preparations told Reuters.

A GM filing with the U.S. Securities and Exchange Commission would be the first step toward an IPO to reduce the U.S. government’s ownership in the automaker after a $50 billion bailout in 2009.

By filing with the SEC in August, GM is aiming to complete its IPO before the November U.S. elections, according to the sources, who asked not to be named because the closed-door preparations remain confidential.

GM also remains in talks with Bank of America Corp., JP Morgan Chase & Co., and Wells Fargo & Co. for dealer and consumer financing for more credit-worthy borrowers, one of the sources said.

One concern for potential investors has been whether GM dealers and potential car buyers have the same kind of access to financing as competitors with in-house financing operations like Ford Motor Co.

GM on Thursday said it would buy auto finance company AmeriCredit Corp. for $3.5 billion in cash to form what it called the “core” of a captive finance operation. The move marks a reversal of the position GM took when it sold control of its former in-house financing arm, GMAC, in 2006.

Any additional financing partnership agreement GM reaches would be complementary to the AmeriCredit transaction, one of the sources said. Many GM dealers have complained that lack of consumer financing has cost them sales.

An IPO for the U.S. automaker, which was restructured in bankruptcy last year, would be the biggest U.S. stock offering since Visa Inc.’s $19.7 billion March 2008 IPO and one of the biggest IPOs of all time.

GM’s second-quarter earnings report is expected to show the automaker generated cash for a second consecutive earnings period, according to one of the sources.

GM Chief Financial Officer Chris Liddell told CNBC on Thursday that the automaker would report results in about three weeks.

GM spokeswoman Renee Rashid-Merem told Reuters on Thursday the automaker would report second quarter results in mid-August.

“Beyond that, we aren’t commenting on matters relating to an IPO. We will launch an IPO when the conditions are right and the company is ready,” she said.

U.S. officials have said repeatedly that GM’s board of directors have a free hand to run the company to try to improve the return for taxpayers.

The automaker posted its first quarterly profit since 2007 in the first quarter. In the June-ended quarter, industry-wide U.S. auto sales were above 11 million vehicles on an annualized and adjusted basis.

But GM’s lower cost structure coming out of bankruptcy has allowed the automaker to break even with industry-wide U.S. sales as low as about 10.5 million vehicles, the sources said.

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GM’s Whitacre Pushes Banks to Sell Cars, Not Just Shares in IPO

General Motors Co. CEO Ed Whitacre never misses the chance for a sales pitch.

When GM sought proposals in May to manage its initial public offering, it didn’t want advice only on selling shares. The automaker wanted help selling Cadillacs and Corvettes. Banks were asked to consider using some of the underwriting fees to subsidize the purchase of GM cars by their employees, according to a two-page document obtained by Bloomberg.

Whitacre, 68, is squeezing concessions from banks vying for a role in what may be the second-biggest IPO in U.S. history. JPMorgan Chase & Co. and Morgan Stanley won the lead mandate in June and agreed to fees of 0.75 percent of the sale, a quarter of the usual rate for large stock sales, people with knowledge of the matter said last month.

“That’s hardball,” said Joe Phillippi, principal of AutoTrends, a consulting firm in Short Hills, New Jersey. “After beating them down on fees they want another pound of flesh. It does sound a little unusual.”

Kristin Lemkau, a spokeswoman for JPMorgan, declined to comment. Mark Lake, a Morgan Stanley spokesman, didn’t have an immediate comment. Randy Arickx, a GM spokesman, said he wasn’t familiar with the request in the document and declined to comment.

Banks were asked to discuss “ideas as to how we can use the IPO to reposition GM and its vehicles within the investment community including your firm’s willingness to reinvest any portion of any underwriting fees into the purchase of GM vehicles for your employees and/or company use.”

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Source: GM to File for IPO Mid-August

General Motors Co plans to file its initial public offering in mid-August, sources familiar with the situation told Reuters.

General Motors is also in talks with banks for a revolving credit line worth $5 billion, sources said. Bank of America Corp , Citigroup Inc , JPMorgan Chase & Co and Morgan Stanley have already agreed to provide $500 million of credit each, with other banks still to be chosen, a source said.

The credit line is expected to be finalized in the next two weeks, about a month before the automaker files for its IPO, a source said. Earlier media reports said the IPO filing was expected in early July.

GM spokeswoman Noreen Pratscher declined to comment.

GM is more likely to cut the valuation on the IPO than delay it, said one source, who requested anonymity because the talks are confidential.

The U.S. Treasury, which owns nearly 61 percent of the automaker’s common shares after a $50 billion bailout, plans to sell $10 billion to $12 billion in shares, sources said.

But a Treasury official said: “It is way too early to know. The pricing and ultimate size of Treasury’s stake are decisions for later in the year.”

GM, which declared bankruptcy last year, has emerged from Chapter 11 protection, and an IPO is a key step for the automaker to wean itself away from government support.

GM is not expected to sell shares immediately, but plans to sell about $3 billion in mandatory convertible notes that convert into shares in the future, a source said. Proceeds from the IPO are expected to be used to repay debt and fund GM’s pension liability, the source said.

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Tesla IPO Probably Generated $24M for CEO Musk

NEW YORK – Elon Musk, CEO of Tesla Motors Inc., made at least $24 million from the electric-car maker’s initial public offering, restoring some of the wealth he’s staked on the company and other startups, Bloomberg reported.

Tesla set a price of $17 a share and Musk sold 1.42 million shares, including an over-allotment to underwriters, according to filings and data compiled by Bloomberg.

Tesla shares earlier today rose as much as 27 percent to $30.42, but ended the day down 6 cents to close at $23.83. It posted a 41 percent gain during its first day of trading yesterday — the second-biggest rally for a U.S. IPO this year.

Musk, 39, who made about $300 million selling PayPal Inc. and Zip2 Corp., said in February he had just $650,000 in “liquid assets” and got loans from friends to pay fees and support for estranged wife Justine Musk, according to a divorce- related filing. The value of his remaining 26.9 million Tesla shares was about $642 million, based on yesterday’s close.

Tesla, the Palo Alto, Calif.-based maker of the $109,000 electric Roadster bought by Brad Pitt and George Clooney, is using proceeds from the IPO to begin production of the battery-powered Model S sedan and develop a range of rechargeable models. Along with celebrity customers, Tesla investors include Daimler AG. Toyota Motor Corp. said in May it will buy a $50 million stake.

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GM Readies Major Product Push in Emerging Markets as IPO Nears

DETROIT – General Motors Co. — laying the foundation for an initial public offering as early as this fall — told analysts today it will introduce 70 new or upgraded models in international markets by 2014, Automotive News reported.

New product launches and robust demand in emerging markets are crucial to the automaker’s growth, GM executives said.

Nearly half of the growth in global automotive sales through 2014 will come in Brazil, Russia, India and China, analysts forecast. Those markets accounted for 74 percent of GM’s sales last year.

And in the first quarter, international markets accounted for 52 percent of GM’s sales volume.

“Nobody can top our position in the world,” GM Chairman Ed Whitacre told analysts. “And we are maintaining a balance sheet that supports and grows the business rather than constrains it.”

GM is on track this year to be the first automaker to sell more than 2 million vehicles in China, now the world’s biggest market, said Tim Lee, head of GM’s international operations.

Chinese new vehicle sales will rise 20 percent this year to 16.5 million.

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