Recently GM announced it would hold its IPO on Nov. 17. Since then, many have been patiently waiting for the outcome of the initial public offering of stock in the company. The GM IPO has been a hot topic for months.
GM IPO date approaches
General Motors had to give the U.S. Treasury the majority of the company’s shares as part of the terms of the auto bailout and the GM bankruptcy more than 18 months ago. Since the company emerged from bankruptcy, an initial public offering was talked about for months. The company finally announced that a GM IPO would take place, and eventually the GM IPO date was set for Nov. 17. However, according to USA Today, members of the general public are not going to have GM shares made available to them. For an initial public offering, that is actually par for the course, as large investment houses are often given first choice by IPO underwriters. The idea is to get as high a stock price as possible right off the bat. General Motors has been posting consecutive profits all year.
Treasury could shed half its stake
On Tuesday, General Motors announced it was increasing the number of shares by 31 percent, up to 478 million from 365 million, according to Fox News. In the GM IPO, the U.S. Treasury could be selling as much as 50 percent of its stake in General Motors. However , if the share price doesn’t increase by at least 50 percent from the initial price of between $32 and $33 per share, the government will likely take a loss. Since the bankruptcy filing and the auto bailout, General Motors has shed underperforming brands such as Hummer, Saturn and Pontiac to focus on the brands that do well and emerged from bankruptcy shortly thereafter.
Remaining shares to be sold over time
General Motors, and the Treasury, announced previously that government shares would be released over time. Shares sold in the GM IPO won’t pay dividends until the government’s stake is completely gone. However, GM profits have been the largest in years.