GM on Track for Mid-November IPO

NEW YORK - General Motors Co. is on track to move ahead with its initial public offering during the week of Nov. 15 after a recent round of meetings with sovereign wealth funds, sources with knowledge of preparation for the deal said.

The GM IPO has been closely watched both because of its expected scale and because of the involvement of the U.S. government, which is looking to the landmark stock offering to reduce its nearly 61 percent stake in the automaker, reported Reuters.

Bankers representing GM met with sovereign wealth funds in Asia and the Middle East over the past two weeks to make the case that the automaker has emerged from its 2009 bankruptcy as a leaner and more nimble competitor, two of the sources said.

Singapore-based GIC and Temasek Holdings, Kuwait Investment Authority, Qatar Investment Authority and the Abu Dhabi Investment Authority were all approached as part of those meetings, one of the sources said.

At the same time, analysts from the 10 underwriter banks involved in the GM IPO began a series of meetings last week aimed at reaching a consensus on the market value the top U.S. automaker, two of the sources said.

After analysts come to consensus on that valuation, GM will offer investors a discount of 20 percent from that level in pricing shares for the IPO, three sources said.

That margin of discount is part of a standard practice in IPOs to reward investors for taking a risk on a new issue.

GM needs to have a market valuation of about $67 billion if U.S. taxpayers are to break even on the common stock the U.S. Treasury holds.

The U.S. Treasury is expected to be the major seller of common stock in the GM IPO and is prepared to take a loss on the initial sale of stock, sources have said.

The governments of Canada and Ontario will likely follow the lead of the U.S. government as sellers, two sources said. As part of the GM bailout, Canada offered the automaker funding and took a stake of 11.7 percent in return.

It remains unclear if a trust fund affiliated with the United Auto Workers union will sell part of its stake in the IPO. The union trust, which was established to pay for retiree healthcare costs, holds 17.5 percent of GM.

The UAW trust fund - known as the union's VEBA - has been weighing whether it would be better served by waiting to sell stock in GM at subsequent offerings that could come at a higher price, one person with knowledge of the deliberations said.

The GM IPO is expected to price on Nov. 17 with the debut on Nov. 18, three of the sources said.

People involved in the deal have said shares would likely price between $20 and $25 after a stock split by the automaker. On Wednesday, GM Chairman Ed Whitacre also said he thought that was a likely range for the IPO price.

"I can't say how much we'll sell, but I can say we'll have a successful IPO sometime in November," Whitacre said. "It's going to work, and it was absolutely the right thing to save this company.