Bankers pushed to charge the lowest fees in a decade for GM’s IPO

Article by Christian A., on August 27, 2010

Many companies are abuzz about what is being touted as the second-largest initial public offering in US history. It is believed that Wall Street bankers will be forced to charge the lowest fees in at least a decade for Treasury's sale of General Motors Co.

Competing to lead GM's share sale are the following companies: Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley.

Independent International Investment Research plc estimates that up to $12 billion could be raised.

Finance professors at Cornell University and Georgetown University say that the US government may seek underwriting fees of as low as 2%. Bloomberg data indicate that this is less than any US IPO over $5 billion since 1999.

The professors explained that the Treasury, which owns a 61% stake in GM, will urge the banks to accept fees that may be less than half the 5.5% average for all IPOs in the past decade after using up $150 billion in taxpayer money on the same financial firms during the credit crisis.

Bloomberg data also show that the underwriters would generate up to $360 million in an initial offering of GM based on the average 3% fee for previous deals that are more than $5 billion.

Roni Michaely, a finance professor at the Johnson Graduate School of Management at Cornell in Ithaca, N.Y., said that this prospect of pouring in hundreds of millions into the banks is "the last thing they need."

Topics: gm, ipo

If you liked the article, share on:

Comments

Recommended

In 2014, Jaguar Land Rover’s Special Vehicle Operations revealed the F-Type Project 7. At that time, it was said to be the fastest accelerating road car carrying a 5.0-liter Supercharged...
by - May 29, 2017
There is an ongoing rumor going around the automotive community, and it’s aimed at BMW. The rumor? The German marque has reportedly axed the i5 Electric vehicle concept. These supposed...
by - May 29, 2017
Volkswagen's yearly Worthersee affair that happens in Austria is considered a hotbed for all types of cars from the German company's long and renowned history. Most of the gathering features...
by - May 29, 2017
Behold, the Rolls-Royce Sweptail! The Sweptail is probably the biggest two-seater car that has ever been built. It may look odd at first glance, and you may not be fond...
by - May 29, 2017
BMW just keeps on getting bigger and bigger, in terms of their lineup I mean. Just after unveiling the 8 Series Concept, they are now teasing us with an M8...
by - May 29, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries