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Ally files for IPO, readies for Treasury sell-down

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Ally Financial filed for an initial public offering that will allow the U.S. government to sell down its majority stake in the bailed-out auto and mortgage lender.

The company filed with the U.S. Securities and Exchange Commission today to raise up to $100 million US, but the IPO ultimately could bring about $5 billion, including common stock and convertible securities, a source familiar with the situation told Reuters.

"The timing and the size of the proposed offering have not yet been determined," a spokeswoman for Ally said.

Treasury said in a statement it has agreed to be named as a selling shareholder of Ally's common stock, but retains the right to decide whether and at what level to participate in the offering.

Filing for a smaller amount initially allows an issuer to evaluate market conditions closer to the time of the IPO, a common practice for big deals.

When General Motors Co. first filed its IPO paperwork with the SEC, it said it expected to raise up to $100 million. Including overallotments, GM ultimately raised $23.1 billion.

Ally, formerly known as GMAC, was once a unit of GM.

Its IPO will be the latest in a handful of offerings by government-rescued companies that include GM and insurer American International Group Inc, which is preparing to sell more than $10 billion in stock in mid-May.

Bad mortgage loans forced the Treasury to pour $17.2 billion into bailing out Ally during the financial crisis. So far it has recovered $4.9 billion in repayments and dividends.

In addition to owning almost 74 percent of Ally's common stock, Treasury holds about $5.9 billion of mandatory convertible preferred stock.

Counting the $4.9 billion of taxpayer money already recovered and the $5.9 billion of preferred stock it holds, Treasury would need another $6.4 billion to break even on its investment in Ally.

Private equity firm Cerberus is another Ally stakeholder, with 8.7 percent. GM owns 4 percent of Ally directly and 5.9 percent through a trust.

Ally's filing comes on the same day that the Federal Reserve released the names of other banks and companies that borrowed from its main emergency lending facility during the financial crisis.

Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley were listed as the lead underwriters on the offering.

The filing did not specify the number of shares in the offering, the price range, or the exchange on which they will trade.

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