General Motors IPO could be biggest ever
Company back in stock market
NEW YORK — General Motors stock began trading on Wall Street again yesterday, signaling the rebirth of an American corporate icon that collapsed into bankruptcy and was rescued with a $50 billion infusion from taxpayers.
The stock rose sharply in its first minutes of buying and selling, going for nearly $36 per share — almost $3 more than the price GM set for the initial public offering. The stock pulled back by early afternoon and closed at $34.19. It traded for less than $1 when the old company filed for bankruptcy protection last year.
At the New York Stock Exchange, a crowd eight deep jostled around the company’s trading post. Chief executive Dan Akerson rang the opening bell as raucous cheers went up and the sound of a Chevrolet Camaro’s revving engine echoed through the trading floor.
The government hopes the stock offering will be the first step toward breaking even on the bailout. For that to happen, the government needs to sell its remaining GM holdings for an average of roughly $50 a share over several years.
President Obama celebrated the return of GM to the stock market, saying it shows “tough decisions that we made’’ during the financial crisis were beginning to pay off.
“American taxpayers are now positioned to recover more than my administration invested in GM, and that’s a good thing,’’ Obama said.
Ron Bloom, the Obama administration’s senior adviser for the auto industry, refused to predict whether taxpayers would get all the money back.
The IPO could wind up as the largest in history. Earlier this week, GM raised the high end of its initial price range from $29 to $33 and increased the number of shares it was offering from 365 million to 478 million common shares because investor demand was so high. Counting preferred stock issued by the company, the deal’s value could top $23 billion.
At midday, 264 million GM shares had been traded.
Such volume is not unusual following a high-profile offering. It’s a sign that big institutional investors are taking profits and smaller investors who were shut out of the IPO are now buying, said David Whiston, an analyst with Morningstar Inc.
Chris Liddell, GM’s chief financial officer, said there was high interest from sovereign wealth funds, which are pools of money from reserves of foreign governments. In the end, 90 percent or more of the shares were sold in North America, he said.
The increased selling price means the market is judging the GM rescue a success, Bloom said. “Almost $20 billion in private capital voted that they wanted to be part of General Motors.’’
In the initial offering, the government reduced its ownership stake from 61 percent to about 36 percent. The US Treasury sold 358 million shares of the resurrected GM — which is smaller, profitable, and cleansed of most of its debt. If bankers exercise options to buy and resell more shares, the government will wind up selling more than 400 million shares, reducing the stake to 33 percent of GM.