Update: A reports by Reuters says that GM “will look to sell just over $10 billion worth of common stock and $3 billion of preferred stock in an initial public offering that would shift the U.S. government to a minority shareholder.” GM expects to sell 365 million common shares for $26 to $29 each. – Reuters
GM is getting ready to start its return to wall street in the next seven to ten days, and consultants say the timing couldn”t be better. 2010 was a weak year for IPOs, but October saw vast improvements in that market. Six IPOs were issued last week, yielding an average return of 31%, and at least six more major deals are expected next week.
No IPO price has been set yet, as it will be heavily dependent on the results of GM”s upcoming road show and announcement by the Treasury Department of exactly how much the government plans to divest. Also factored into that price, will be third-quarter figures, which is expected to be the third consecutive profitable quarter for the company.
GM has announced a number of measures indicating attempts to tidy up its finances, including paying down a large portion of debt, but officials are barred from speaking about IPO related matters.
Despite the positive factors surrounding the IPO, GM has some hurdles to overcome. Investors are going to be looking hard at traditional technologies, future-product lineup, and high-volume prospects. Less important to investors at this point in time are products such as the Chevy Volt. Another major concern to investors is sure to be the government”s divestment in the company, as politics could easily play big part; the recent instability at the top is certainly not something investors will want to see in the future.
– By: Stephen Calogera
Source: Detroit News