GM wants to raise as much as $15.8 billion in IPO

Article by Christian Andrei, on November 17, 2010

After having just increased the asking price by 14%, General Motors Co. now aims to raise up to $15.8 billion in its initial public offering, according to a statement from the company. The statement revealed that GM, which is 61%-owned by the US Treasury, is currently selling 365 million shares at $32 to $33 each.

Two sources said that the IPO was already multiple times oversubscribed at the original range of $26 to $29 each. The sources also divulged that GM's underwriters plan to exercise an option to purchase 54.8 million more shares. Bloomberg said that the offering is set for tomorrow.

The purpose of this IPO is so that GM will be able to return a portion of the $49.5 billion taxpayer bailout it received last year. Bloomberg data show that the Treasury, which is taking a loss on its portion of the sale, will only break even if the shares go up by at least 50%.

If the shares are valued at $33 each, the sale would give GM a market value of almost $50 billion, compared to Ford Motor Co.'s $59 billion.

Josef Schuster, the founder of IPOX Capital Management LLC, which oversees $3 billion, said that the demand is much more than the shares being offered. In his assessment, GM has done an “extremely good job in marketing this IPO so far.”

The IPO takes place only 16 months after GM emerged from bankruptcy. The IPO would be the second-largest in US history, trailing Visa Inc.'s $19.7 billion sale in March 2008. The company’s filing also revealed that it increased its preferred stock offering to $4 billion, $1 billion more than what was planned. [via autonews - sub. required]

Topics: gm, ipo, united states

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