Ally completes pull-out from international business

Ally Financial has sold its remaining stake in a joint venture that conducts auto finance operations in China to General Motors (GM) for $1 billion, in a deal which marks its final exit from international operations.

Ally, the largest US auto lender and former in-house financing arm of GM, sold its 40% interest in the China joint venture SAIC-GMAC Automotive Finance Company Ltd to GM Financial and GMAC UK, a wholly owned subsidiary of GM Financial. The transaction will boost Ally’s first-quarter profits by around $400 million after taxes.

“We are pleased to have completed the final step in selling our international holdings and, with the sale of the China interest, Ally has received $9.4 billion in total proceeds from the sales of its international operations,” chief executive officer Michael A. Carpenter said. “We begin 2015 with a fresh start and two extremely strong US franchises in our dealer financial services and direct banking operations, and we remain committed to expanding upon these areas of strength over the coming year.”

Under the terms of the deal GM Financial acquired a 5% equity interest and GMAC UK a 35% equity interest in the joint venture. GM Financial sold its stake in SAIC-GMAC to Shanghai Automotive Group Finance Company Ltd (SAFC), a current shareholder.

As a result of these equity transfers, SAIC-GMAC is now jointly owned by SAIC FC (45%), GMAC UK (35%) and Shanghai General Motors Company Ltd (20%), which is a joint venture between Shanghai Automotive Industry Corporation and GM which each own 50%. GM contributed $700 million in equity to GM Financial to facilitate this acquisition.

“The close of the joint venture in China completes our acquisition of Ally’s international operations that began in November 2012. This is an important step in our evolution as GM’s global captive finance company and in supporting its growth strategy. China is a significant market for GM and we want to ensure the availability of competitive financing for its customers and dealers,” said president and CEO Dan Berce.

GM Financial acquired Ally’s international operations in Europe and Latin America in 2013. It now has operations in 19 countries, serving more than 16,000 dealers and providing auto finance products in markets that cover over 80% of GM’s worldwide sales.