GM Increases IPO Size

The moment of the first major initial public offering by a major automotive manufacturer and at the same time the second largest in history after the one made by VISA in 2008 is approaching. Until that time however, GM is continuing to tweak the IPO which will take it off the hands of the US government.

The carmaker announced today it will increase the number of common stock offered from 365 million shares to 478 million shares, excluding the amount that the underwriters have the option to purchase to cover over-allotments.

The reason behind the increase in common stock offered is the desire of both the US government and the UAW, the largest GM shareholders, to get rid of the stakes they acquired following last year's bankruptcy.

“Treasury is confident demand is there for these shares to get soaked up,” Michael Yoshikami, from YCMNet Advisors told Bloomberg. “It makes a lot of sense for them to do this because we’re already talking about shares going out at a price that is far above what everybody thought would be in demand.”

Yesterday, the manufacturer announced it will raise the price of one share from $26.00 to $29.00 per share to in between $32.00 to $33.00. At the same time, the carmaker will offer now 80 million shares of its Series B mandatory convertible junior preferred stock, up from 60 million.

General Motors' IPO is being handled by a conglomerate of banks and financial institutions which comprises Morgan Stanley, J.P. Morgan, BofA Merrill Lynch, Citi, Goldman, Sachs & Co., Barclays Capital, Credit Suisse, Deutsche Bank Securities and RBC Capital Markets.