Ally Financial, the nation’s second-largest employer, has been a beneficiary of a hedge fund buyout that boosted the stock price of the firm.
The purchase of Ally’s assets by New York-based asset management firm Blackstone Capital Group LLC and its investment firm New Capital Partners Inc. in August will increase Ally’s market capitalization to $5.5 billion, the firm said Tuesday in a filing.
Ally’s net income for the year will be $921 million, up from $890 million last year.
The investment firm is expected to return a significant portion of its assets to shareholders through dividends and share repurchases.
Ally will retain a minority stake in New Capital.
Blackstone said it will retain approximately 50 percent of Ally and New Capital, but is expected not to retain the majority share.
Ally and the firm have been working together for the last few years, and the move will increase the size of Blackstone’s investment.
Ally also will remain a member of the investment firm’s portfolio.
Ally is part of the same group of companies that have invested in Fidelity, which also includes Vanguard and Blackstone.
Blacksmith said it expects to receive approximately $50 million in dividends in 2018 and 2019, and expects to make a further $60 million in 2019, according to a filing with the Securities and Exchange Commission.
Ally declined to comment on the investment.
Blackstones investment in Ally has been largely in the health care sector, including health care-related companies.
Blackstone acquired Ally’s investment-banking unit, AllyHealth.
Blackston said it is the second hedge fund to invest in Ally in recent months.
BlackStone acquired the investment banking arm of the health insurance company in August.
In June, the fund also purchased a majority stake in an investment bank, BDO Financial Services.
Blackstein said in its filing that it expects Ally to post $1.8 billion in net income in 2021 and 2022, and to post a net loss of $917 million for 2021 and $10.6 million for 2022.
Ally has a $4.5 trillion debt load.