GM on track for mid-November IPO: sources

Thu Oct 14, 2010 8:47pm EDT
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By Soyoung Kim and Clare Baldwin

NEW YORK (Reuters) - General Motors Co GM.UL is on track to move ahead with its initial public offering during the week of November 15 after a recent round of meetings with sovereign wealth funds, sources with knowledge of preparation for the deal said.

The GM IPO has been closely watched both because of its expected scale and because of the involvement of the U.S. government, which is looking to the landmark stock offering to reduce its nearly 61 percent stake in the automaker.

Bankers representing GM met with sovereign wealth funds in Asia and the Middle East over the past two weeks to make the case that the automaker has emerged from its 2009 bankruptcy as a leaner and more nimble competitor, two of the sources said.

Singapore-based GIC and Temasek Holdings, Kuwait Investment Authority, Qatar Investment Authority and the Abu Dhabi Investment Authority were all approached as part of those meetings, one of the sources said.

At the same time, analysts from the 10 underwriter banks involved in the GM IPO began a series of meetings last week aimed at reaching a consensus on the market value the top U.S. automaker, two of the sources said.

After analysts come to consensus on that valuation, GM will offer investors a discount of 20 percent from that level in pricing shares for the IPO, three sources said.

That margin of discount is part of a standard practice in IPOs to reward investors for taking a risk on a new issue.

GM needs to have a market valuation of about $67 billion if U.S. taxpayers are to break even on the common stock the U.S. Treasury holds.   Continued...