General Motors could sell the IPO next week, above the forecast price range and exercise of an option to increase the size of the IPO amid signs of strong demand, two people familiar with the deal said.
The six receiving GM executives have received from investors on the tour this week to promote the IPO has been strong enough to sell the shares at the top of the range offer of $ 26 to $ 29 or more $ 30, said the people, who declined to be identified because the information is private. SAIC Motor Corp., GM's partner in China, will probably be one of the buyers, three people familiar with the plans said.
GM likely to exercise its call greenshoe or over-allotment option, the grant of 54,800,000 shares more subscribers, the people said. That would help the U.S. Treasury Department to recover more than 49.5 billion U.S. dollars of public investment in the automaker based in Detroit. Strong demand for the IPO may also help to ensure higher prices when the U.S. sold its remaining shares in the offer later.
Noreen Pratscher, a GM spokesman, declined comment.
The offer of 365 million shares, or 24 percent of the shares of the automaker, and several times oversubscribed, one of the people, he said. The banks arranging the sale will continue taking orders until the tour ends next week, to avoid the perception that any potential investor to be excluded, the source said. GM is expected to price its initial public offering on November 17.
"Unlike Real '
The automaker is taking orders for large institutional investors who tend to be long-term shareholders by about $ 32 per share, one person said. About 15 percent to 20 percent of the offering will go to the people, the source said.
GM shareholders could sell about $ 2 billion in shares to sovereign wealth funds in the Middle East and Asia in the allocation of $ 500 million, the source said.
Joe Phillippi, principal of consulting firm AutoTrends Inc. in Short Hills, New Jersey, said that the IPO was sold to institutional investors was a good sign for taxpayers because it means that GM is willing to find buyers without having to aggressively market the shares to people.
"Only things stock in retail when the offer is wrong," said Phillippi.
Large institutions are likely to keep the population of more than hedge funds or individuals, which means they are not sold quickly and put downward pressure on stocks, he said.
GM gains
The offer comes 16 months after it emerged from bankruptcy GM backed. The company reported third quarter net profit of 2.16 billion U.S. dollars this week, bringing the carmaker's earnings this year to 4.77 billion U.S. dollars. That topped the 4.46 billion U.S. dollars profit for Toyota City, Japan-based Toyota Motor Corp., according to data compiled by Bloomberg.
500 of Standard & Poor's has risen to a maximum of two years this month amid signs the U.S. economy not slip back into recession after the longest contraction since the Great Depression.
"It was enough money on the table that the money managers that there is a real setback," said Phillippi. "GM had a good third quarter."
Without the exercise of the greenshoe, the Treasury Department's involvement would be reduced to 43 percent from 61 percent now, according to a regulatory filing with the Securities and Exchange Commission. If the over-allotment option is used, the share would drop to 41 percent, according to the filing.
UAW, Canada
The confidence of the United Auto Workers' retiree health care would reduce its stake to 15.3 percent from 19.9 percent under the basic plan, and the Canadian government's position would be reduced to 9.6 percent from 11 , 7 percent. With the greenshoe, union trust would fall to 14.6 percent and Canada 9.3 percent.
SAIC is likely to buy a small number of shares, three people said. The objective of the Chinese auto maker is to show support for its U.S. partner, one person said. The Treasury Department wants to avoid the impression that a Chinese company is the acquisition of GM, two people said. SAIC is likely to buy a stake of 1 percent or less, people have said.
At a price of $ 29 per share over-allotment option would raise another $ 1,150,000,000 to the Treasury Department, which the government's total initial public offering to $ 8.8 billion.
The Treasury does not sell GM shares for an average of $ 43.67 per share - 51 percent more than the upper end of the range it offers - to break even, according to a person familiar with the planning.
Mark Paustenbach, a Treasury spokeswoman declined comment.
Ford's market value
A $ 29 per share, GM would have a market capitalization of $ 43.5 million, based on 1.5 million shares remaining outstanding after the offering, according to the filing of the company. Dearborn, Michigan, Ford Motor Co. has a market value of 56.6 billion U.S. dollars.
Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. is a leader in the supply, according to the regulations. Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc. and Royal Bank of Canada are among the companies also listed in the brochure.
TD Ameritrade Holding Corp., the U.S. brokerage third largest retail customers, will not participate in the initial public offering of GM, according to an e-mail Christina Goethe, a company spokesman in Omaha, Nebraska-based.
"We were informed that we will not receive an allocation of shares," he said. "We have several relationships with underwriting firms of different products, and in this case the company is underwriting the share allocation for this offer."
Fidelity customers
Fidelity Investments customers who either do 36 operations a year, has $ 100,000 of assets to the company, Fidelity or the use of "premium services" to wealthy have access to the IPO, according to Steve Austin, a spokesman the Boston-based firm.
Fidelity has a strategic relationship with Deutsche Bank, which allows GM to offer the shares to its customers, he said. Austin declined to say what Fidelity allocation will be for the initial public offering or the amount of claim is being of their clients.
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