China to Invest in GM's Initial Public Offering

Among the banks helping General Motors with its initial public stock offering next week are two identified by initials only: ICBC and CICC.

This is especially interesting to Americans who disagree with the US Government ownership of General Motors, as one of the banks is the Industrial and Commercial Bank of China, one of China's four government banks, and the other is China International Capital Corp., a joint venture run by Central Huijin Investment Ltd., an investment company run by the government of China, and Morgan Stanley, a global financial services firm headquartered in New York City.

This is the first time Chinese government banks take part in an US issued IPO, according to IPO tracking firm Dealogic. The banks are listed as co-managers in the offering, meaning they will sell a portion of the new shares.

SAIC, GM's partner in China, is planning to buy a 1 percent stake, worth approximately US $500 million, as reported on Friday by the Wall Street Journal (WSJ). SAIC is owned by the Shanghai city government. Other foreign investors that take interest in GM's IPO include several sovereign wealth funds in the Middle East and Asia. WSJ reports those funds could invest US $1 billion in GM.

GM's stock offering will reduce the US Treasury's stake from 61 percent to 43 percent. The U.S. Treasury has been clear that international investors are welcome to pour money into GM, and many outside the U.S. are considering taking stakes in the company.

"We expect that a large and diverse group of institutional investors will be offered an opportunity to participate, with no single investor or group of investors receiving a disproportionate share or unusual treatment," the Treasury said in a recent statement.
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