GM Raises Sights for IPO
General Motors says it is raising the price range for its initial public offering of common stock to $32 to $33 per share. The new price range is about 14% higher than originally expected, reported The Wall Street Journal.
The share and price expansion are the result of strong investor demand for shares in the U.S. auto maker, which now is generating solid profits after shedding costs under a 2009 bankruptcy reorganization.
The new price range indicates the U.S. government, currently owner of a 61 percent stake in GM, should reap at least $8.6 billion from the IPO, about $1.4 billion more than previously expected. After the offering, the government is expected to be left with about a 35% stake in GM that it expects to sell over time.
Earlier this month, GM said it would issue 365 million shares in the IPO, totaling 24 percent of the company's stock. In response to strong demand from investors, the banks organizing the IPO are likely to exercise an overallotment option that could add another 54.8 million shares. GM also plans to sell $4 billion of preferred stock, up from $3 billion.
Separately, the U.S. government is weighing whether to increase the number of shares offered by as much as 20%, or another 84 million shares.
GM was given $49.5 billion by the government and so far has paid back $9.5 billion. The government hopes to recoup the remainder of its investment through future sales of its GM stock.
This week, the U.S. Treasury plans to sell, at a minimum, 263.5 million shares. Canada's federal and provincial governments, which aided in the rescue, will sell at least 30.5 million shares combined while a health care trust run by the United Auto Workers would sell at least 71 million. If the number of shares to be sold are increased, they could come from any combination of the major holders.
If the stock is priced at $32.50, the midpoint of its new price range, the IPO would raise a total of $18.2 billion, assuming 54.8 million shares as part of the over allotment and mandatory convertible shares. Under the original price range, it was expected to raise as much as $15 billion. Increasing the offering by 20 percent would push the amount up by another $2.7 billion.
Electronic trading company Getco LLC will be the designated market maker at the New York Stock Exchange for the IPO. A NYSE Euronext spokesman confirmed Getco was selected from among the exchange's five designated market makers, which are generally responsible for buying and selling shares, smoothing trade imbalances and providing liquidity in return for incentives paid by the exchange.
GM investors will include three or four sovereign-wealth funds that are planning to buy more than $1 billion dollars combined in the IPO. Sovereign wealth funds are set up by governments to invest in businesses. China's largest auto maker, SAIC Motor Corp., is on track to buy around $500 million in GM shares, pending Chinese government approval, people familiar with the matter have said.
More Industry

Selling to Grow
The question of whether you should sell your agency and if so, when, is up to you. But it’s a question worth asking to ensure you keep the business on the right path for yourself, employees and clients.
Read More →
Auto Group Acquires Top-Performing Rooftop
Car Pros sold its Kia Huntington Beach location to Sutherlin Automotive Group, marking the buyer’s third location in Southern California.
Read More →
China as Pacesetter
Automotive leaders huddled on where North America stands in the global picture and how it can strengthen its position against the Asian juggernaut’s surging industry.
Read More →
BMW Concept Car Makes Fuel to Burn
The prototype developed in concert with a South Carolina university engineering team generates more solar energy than it uses in a typical daily commute.
Read More →
South Carolina Auto Group Downsizes
Florida-based group Holler-Classic has acquired four rooftops, its first in South Carolina, from Dick Smith Automotive Group.
Read More →
July Was Hot for Auto Borrowers
Credit proved readily available for many, but most loans left buyers in negative territory, Cox Automotive said.
Read More →
Structure Leads to Optimized Auto Listings
As the average car-buying journey has shifted to a blend of digital and retail, a dealership’s vehicle listings must be optimized to answer shoppers’ questions clearly and accurately.
Read More →
Consumers Mixed on Economy, Finances
A July survey shows spotty sentiment of current and future conditions, in addition to demographic differences as overall opinion of present circumstances kept sliding.
Read More →
EVs Closing the European Gap
Electrified powertrains led June new-vehicle sales in Europe, reaching 26% of the market.
Read More →
Early Intervention Saves Retention
Sales and service departments have the highest annual dealership turnover rates, according to a new industry report, costing money and time that could be better spent elsewhere.
Read More →