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Summary

  • Bankruptcy plan became effective on December 17, 2013.
  • Top line revenue grew 10% 2013 vs 2012, net income before tax benefit declined 70%.
  • In a slow growth market.

Based in Detroit, MI, Ally Financial (NYSE:ALLY) scheduled a $2.5 billion IPO on the NYSE with a market capitalization of $12.8 billion at a price range midpoint of $26.50 for Thursday, April 10, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint managers: Citi, Goldman Sachs, Morgan Stanley, Barclays, BofA Merrill Lynch, Deutsche Bank and J.P. Morgan

Co-Managers: Sandler O'Neill, Keefe Bruyette Woods, Credit Suisse, Evercore Partners, RBC Capital Markets, Scotiabank/Howard Weil, Credit Agricole CIB, Raymond James, Societe Generale, Guggenheim Securities, Sanford Bernstein, The Seaport Group

End of lockup (180 days): Tuesday, October 7, 2014

End of 40-day quiet period: Tuesday, May 20, 2014

Summary

Founded in 1919, ALLY is a leading automotive financial services company with over 90 years of experience providing a broad array of financial products and services to automotive dealers and their customers.

The Bankruptcy Court entered an order confirming a bankruptcy plan on December 11, 2013, which became effective on December 17, 2013.

Valuation

Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (MM)

Net rev

Continuing Erngs

BkVlue

TanBV

in IPO

Ally Financial (ALLY)

$12,760

3.0

30.7

0.9

0.9

20%

Fairly recent IPO comparable

Santander Consumer USA (NYSE:SC)

$8,190

2.2

11.8

3.0

3.2

Conclusion
Neutral. It's a bail out from US Treasury. Don't expect favors from the US Treasury.

Compared to Santander Consumer USA ALLY is at higher price-to-net revenues and higher price-to-earnings ratios, but a lower price-to-book value ratio.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

ALLY (formerly GMAC Inc.) is a leading, independent, financial services firm.

Founded in 1919, ALLY is a leading automotive financial services company with over 90 years of experience providing a broad array of financial products and services to automotive dealers and their customers.

ALLY became a bank holding company on December 24, 2008, under the Bank Holding Company Act of 1956, as amended (the BHC Act).

Additionally, ALLY's election to become a financial holding company (FHC) under the BHC Act was approved by the Board of Governors of the Federal Reserve System (FRB), and became effective on December 20, 2013. ALLY's banking subsidiary, Ally Bank, is an indirect wholly owned subsidiary of Ally Financial Inc. and a leading franchise in the growing direct (internet, telephone, mobile, and mail) banking market.

ALLY's Dealer Financial Services operations offer a wide range of financial services and insurance products to 16,000 automotive dealerships and approximately 4 million of their retail customers.

ALLY has deep dealer relationships that have been built over its greater-than 90-year history and its dealer-focused business model makes ALLY a preferred automotive finance company for many automotive dealers.

ALLY's broad set of product offerings and customer-focused marketing programs differentiate it in the marketplace and help drive higher product penetration in its dealer relationships.

ALLY's ability to generate attractive automotive assets is driven by its platform and scale, strong relationships with automotive dealers, a full suite of dealer financial products, automotive loan-servicing capabilities, dealer-based incentive programs, and superior customer service.

ALLY's automotive financial services include providing retail installment sales financing, loans, and leases, offering term loans to dealers, financing dealer floorplans and other lines of credit to dealers, fleet leasing, and vehicle remarketing services.

ALLY also offers vehicle service contracts and commercial insurance, primarily covering dealers' wholesale vehicle inventories. ALLY is a leading provider of vehicle service contracts.

History

ALLY's Mortgage operations were historically a significant portion of its operations and were conducted primarily through the Residential Capital, LLC (ResCap) subsidiary.

On May 14, 2012, ResCap and certain of its wholly-owned direct and indirect subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court).

The Bankruptcy Court entered an order confirming a bankruptcy plan on December 11, 2013, which became effective on December 17, 2013.

Dividend Policy

No dividends are planned.

Competition

Competition for automotive financing has further intensified as a growing number of banks have become increasingly interested in automotive-finance assets.

In addition, ALLY faces significant competition from commercial banks, savings institutions, and other financial institutions.

ALLY's insurance business also faces significant competition from automotive manufacturers, insurance carriers, third-party administrators, brokers, and other insurance-related companies.

5% stockholders

U.S. Department of the Treasury 36.8%

Third Point LLC 9.5%

Persons affiliated with Cerberus Capital Management, L.P. 8.6%

Use of proceeds

The selling stockholder (U.S. Treasury) is selling all of the shares of common stock in this offering and ALLY will not receive any proceeds from the sale of the shares.

Disclaimer: This ALLY IPO report is based on a reading and analysis of ALLY's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: Ally Financial