General Motors Co. has started to sell $18.1 billions worth of shares on this said to be the second largest initial public offering ever in the United States capping a remarkable two-year turnaround which caused the company to beg for a government bailout in posting its profits in over six years.
GM sould about 478 millions shares on Wednesday at its initial price of $33 each, a price which is higher than expected by the company and its bankers few days ago. It is expected that about 71.7 million shares will be sold as an additional which is a part of an overallotment allowed when stock sales are stronger than expected.
Today, GM’s stock price has reached about $36, giving a $3-change since its first offering on the market.
GM executives were greeted by traders and bankers on Wednesday afternoon at the Manhattan headquarters. Executives were standing and cheering while wearing blue shirts with GM design.
GM shares buyers include giant pension and hedge funds as well as the company’s factory workers and retirees. Among those foregin buyers is China’s largest car maker, SAIC Motor Corporation which is GM’s biggest partner in the world’s largest auto market. SAIC is said to buy about $500 million worth of shares for a GM stake of close to 1%.
The proceeds of the selling of shares of GM will help pay back the U.S. government for the $49.5 billion spent on its controversial rescue of the company which lost billions of dollars a year. The company has been gaining U.S. market share with strong-sellers such as Chevrolet Equinox and Buick LaCrosse after several years of seeing clients slip away to foreign-based rivals.
The U.S. Treasury will cut its ownership stake in GM to about 26% from 61% with the help of the stock sale, including all the overallotments. This would ease the problem of General Motors which had turned off potential shoppers and investors.