General Motors Co., sold shares with $18.1 billion in the initial public offering (IPO), which may be the second-largest IPO in American. This IPO shows the end of the extraordinary journey for company turning losses into gains within two years. GM had to beg the government assistance, and now it realizes the steady profit first time for six years.
GM sold out approximately 478 million shares at $ 33 per share, the price is higher than the possible level that GM and its hired bank have predicted several days ago.
General Motors on Wednesday sold for $ 33 per share the price is higher than General Motors and its Bank hired a few days ago that the possible level. If the sales of shares are better than expected, General Motors would empower the bank to carry out over-allotment option and sale 7,170 million shares additionally. GM also sold 4.35 billion U.S. dollars of preferred stock.
At the headquarter of Morgan Stanley in Manhattan which is one of the leading banks of GM, General Motors executives wearing a blue T-shirt won a standing ovation of the traders and bankers at Wednesday afternoon Many traders even caught chance to take photos as memories with Digital Camcorder.
GM stock buyers include large pension funds, hedge funds and General Motors retirees. Foreign buyers include the China's largest carmaker --Shanghai Automotive Group Co., Ltd. This is GM's biggest partner in the world's largest auto market. Shanghai Automotive bought about 500 million shares, which account nearly 1% of the share ownership.
Funds raised will help GM to repay 49.5 billion U.S.
By the sale of shares, the Treasury's stake in GM reduces from 61% to about 26%. After the over-allotment option is exercised, it would reduce further in future. This will probably dilute traces of Government Motors. This stain has ever made some GM car buyers and potential investors stay away.
Whether General Motors can revive and the strategy that government sells so many shares at one time is successful, the major test will occur on Thursday, The shares of General Motors will start trading on November 19, 2010 for first time, since the bankruptcy and reorganization proceedings in the June 1, 2009.
Investors and analysts concern about IPO Price in the first day. .If the stock rose 10% -20% more than the general level such as that of Digital Camcorder and Bar Phone, some observers might say,General Motors and the U.S. government set the IPO price too low and let others get benefit in vain . On contrary, if the stock fell, this means some investors continue to question the future of GM.