[Please note, in "Investopedia" accounts I cannot buy an IPO on day 1 as the stock won't register in the database until the next day. In the real world, I was thinking at the original IPO price of $26 to $29, I'd be willing to buy up to $35ish... but with the higher IPO price, it might open even stronger than I assumed]
- 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.
- 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% 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% 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.
- 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.
- As part of the turnaround of GM, he (Rattner) forced out the company's then-chief executive, Rick Wagoner, and pushed the company to shutter plants, lay off tens of thousands of workers and eliminate billions in debt through bankruptcy.
- Earlier this month, GM reported a $2 billion profit for its third quarter. It earned $1.2 billion in its second quarter and $865 million in its first quarter.
- China, with the world's biggest and fastest-growing auto market, is now a key source of strength for GM and has been central in its pitch to investors for the IPO. GM is now the top-selling foreign brand in China, having overtaken Volkswagen AG. This year, for the first time, GM is selling more vehicles in China than in the U.S.