Ed Whitacre has gotten General Motors Co. in a much better position now that it had been in recent years but the upcoming initial public offering this year is expected to be tougher than anything he has encountered before.
At the end of last week, bonds that convert into GM shares fell to their lowest level since Feb. 26.
GM, which earned $865 million in the first quarter, continues to lose money at its European unit. Chief Executive Officer Whitacre has less than four months to reach its target of setting up a lending division.
The IPO market has not been smooth, with 32 deals pulled since April. Whitacre said that he wanted to start selling shares as soon as possible.
James Kahan, a former AT&T executive, said that for Whitacre to succeed at this, he will have to balance his natural inclination to seek a big IPO against the need to make it successful for the government, which owns 61% of the automaker. Kahan added that Whitacre prefers to do "bolder and bigger rather than small and timid."
Whitacre would also have to give the government the "best value for its stake, too." The Obama administration needs GM to go public to lower its 61% stake and harvest returns on its $50 billion investment.
Sources said that Morgan Stanley and JPMorgan Chase & Co. are expected to lead the initial sale. They added that a June selection means that GM may be able to sell shares in the fourth quarter. [via autonews]