Underwriters on Ally Financial Inc.’s initial public offering have elected to partially exercise the over-allotment option to buy an additional 7,245,670 shares of Ally common stock at the IPO price of $25 from the U.S. Treasury Dept.
Treasury would recover another $181 million in the transaction.
The deal, which is expected to close on May 14, would leave Treasury holding around 16% of Ally’s common stock.
“Ally’s IPO marked another significant milestone in Treasury’s effort to wind down the Troubled Asset Relief Program (TARP),” said Acting Assistant Secretary for Financial Stability Tim Bowler.
Since its debut on the street, Ally’s share price has ranged from $23.76 to $27.90. Lead underwriters include, Citigroup, Goldman Sachs & Co., Morgan Stanley & Co.., and Barclays.
Underwriters can exercise the over-allotment option solely for the purpose of covering over-allotments, if any, in connection with an initial public offering. To the extent the option is exercised, each underwriter must buy a number of additional common shares approximately proportionate to that underwriter’s initial purchase commitment in the shares according to Ally’s S-1 regulatory filing on March 27.