Ally Financial Inc. apparently will wait for the slumping stock market to recover before pursuing an initial public offering.
According news reports, the Detroit-based lender formerly known as GMAC Inc. has indefinitely postponed its IPO that had been scheduled for late June. Ally had anticipated raising $5 billion to $7 billion from stock sale, which it intended to use to repay a portion of the $17.2 billion of bailout funds it received from the Treasury Department at the height of the financial crisis. The government currently owns 74% of Ally's stock.
Ally is postponing the IPO due to largely to market conditions, according to news reports.
A string of weak economic news has punished stocks in recent weeks. The Dow Jones industrial average appears headed for a loss for its sixth straight week and, as of midday today, the Nasdaq index had given up all of this year's gains.
Financial stocks have been hit particularly hard of late amid concerns that regulators would require the largest financial companies to hold more capital than smaller institutions because they pose greater risk to the financial system. According to Federal Reserve data, the $173 billion-asset Ally is the 15th largest bank holding company in the country.
Also of concern to Ally — and potential investors — is a federal investigation into its mortgage foreclosure practices that could result in billions of dollars in fines. Ally and 15 other mortgage firms have already been ordered to reimburse homeowners who were foreclosed on without proper documentation.