As GMAC Weighs IPO, Invesco Mortgage Capital Closes Public Offering

[Update 1: adds background on recent public offering] Invesco Mortgage Capital, a real estate investment trust (REIT) subsidiary of Invesco (IVZ), recently completed the public offering of 9m shares of common stock for gross proceeds of $186.75m, the company announced today. The offering, which priced late last week, marks the second round of capital-raising since the REIT went public in June 2009 with its initial public offering (IPO). Meanwhile, mortgage finance giant GMAC is considering its own initial public offering (IPO) in order to raise capital and repay its bailout. Earlier today, GMAC Financial Services reported a $162m net income for Q110, a first since 2008, as the company announced it will rebrand the GMAC name to Ally Financial on May 10, 2010. According to the Congressional Oversight Panel, the US government spent $17.2bn in support of GMAC and owns a 56.3% stake in the company, as of February 2010. In December 2009, the Congressional Budget Office warned that US taxpayers may lose as much as $10bn of that investment. Ron Bloom, a senior advisor to the Treasury secretary Timothy Geithner, told a COP panel late last week that an IPO may be necessary to help repay the government. Such an event, though, will not likely take place in the coming months. In its earnings report, GMAC outlined its strategy going forward. In addition to a renewed focus on the auto side, GMAC hopes to improve access to the capital markets by improving its debt ratings and lowering cost of funds and fully transition to a bank holding company model. Ally hopes to improve its liquidity position by building deposits while lowering risk position in its mortgage business and defining a more viable long-term strategy for our mortgage origination and servicing business. “Focusing on these key objectives will assist GMAC in achieving the necessary milestones for timely repayment of the US Treasury investments,” the investor presentation stated today, without mentioning an IPO. As for the Invesco public offering, underwriters will maintain a 30-day option to purchase up to an additional 1.35m shares of the company’s common stock to cover over-allotments, if any. The company expects to use the net proceeds from this offering to make additional acquisitions of residential and commercial mortgage-backed securities and mortgage loans, on a leveraged basis, and for other general corporate purposes. Credit Suisse Securities and Morgan Stanley acted as joint book-running managers for the offering. Keefe Bruyette & Wood, Stifel, Nicolaus & Company and JMP Securities served as co-managers. Write to Jacob Gaffney. The author holds no relevant investments.

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