GM in record float as raises over $23bn
GENERAL MOTORS (GM) pulled off the biggest initial public offering in US history yesterday, raising $23.1bn after pricing shares at the top of the proposed range in response to huge investor demand.
GM sold 478m common shares at $33 each, raising $15.77bn, as well as $4.35bn in preferred shares, more than the initially planned $4bn.
Including an option that would allow underwriters to sell more shares, expected to be
exercised in coming days, GM looks set to raise $23.1bn – the biggest initial public offering ever.
The strong response to the stock sale reflects growing investor confidence that GM is moving beyond its unpopular, taxpayer-funded bankruptcy in June 2009 with sharply lower costs and higher profit potential.
The US government’s stake in GM will drop to about 33 per cent from 61 per cent if all available shares are sold.
The stock will begin trading today on the New York and Toronto stock exchanges.
The success of the IPO is good news for the Obama administration, which faced criticism for bailing out GM, and will help the automaker shed its “Government Motors” label.
Auto industry executives and analysts said the reversal in Wall Street sentiment toward GM pointed to renewed confidence in an industry that was hit hard by the credit crisis of 2008.
That is a positive sign for a range of auto-related companies, including Chrysler, that are looking to tap the credit and equity markets in coming months, analysts said.
The stock sale represents a big step toward taxpayers recouping the embattled US government’s $50bn rescue of the 102-year-old company, which had fallen from blue-chip status to bailout basket case in recent years.