GM shares jump on market return

The GM workers’ health insurance fund will sell much of its 20% stake in the company via the IPO

Surprisingly strong investor demand allowed General Motors (GM) to up the size and the price of its initial public offering of shares.

The company, returning to the market after a $50bn government bail-out, said it had sold its stock at $33 each.

The sale could leave GM the biggest share offering in the world.

Seven times more buyers than shares on offer meant the company was able to lift the price from the $26 it initially hoped for.

GM will raise a total of $20.1bn from the sale of the shares – known as common stock – with $4.35bn coming from the sale of preferred shares- which pay a fixed dividend and do not have voting rights.

Including an overallotment option, which will be settled over the next few days, GM looks set to raise $23.1bn, which would put it ahead of the $22.1bn raised by the Agricultural Bank of China’s market launch.

The share sale will allow the US government reduce its current 61% stake in the company to as low as 33%.

Its return to the stock exchange follows recent bankruptcy and delisting from the market.

The new price values the company at about $63bn, just shy of the $66bn valuation that would represent a zero loss to the US Treasury on its rescue takeover of the company.

GM’s vice chairman and chief financial officer, Chris Liddell, said: “As we prepare to enter the equity markets, all of us at GM are excited about this historic milestone. We are especially appreciative of those who stood by us through the toughest times.”

GM returned to profit during the current year for the first time since 2004. The company made $5bn during the first nine months of this year.

Investors in the company are expected to include several Middle Eastern sovereign wealth funds courted by GM executives during the marketing period.

Another possible buyer is GM’s Chinese state-owned partner, SAIC Motor Corp, although it is unclear whether Beijing has given the company permission to participate.

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