11:49 AM
GM IPO multiple times oversubscribed: sources
Addison Ray
By Clare Baldwin and Soyoung Kim
NEW YORK | Fri Nov 12, 2010 2:06pm EST
NEW YORK (Reuters) - General Motors Co's GM.UL initial public offering has been multiple times oversubscribed as of Friday, indicating the IPO will be priced around the top end of the range, three people familiar with the matter said.
Investor demand for GM's common shares is currently around $60 billion and rising, the sources said. GM filed with U.S. regulators to raise about $10 billion worth of common stock, meaning that the common stock portion of the IPO is currently about six times oversubscribed.
There is also "excess demand" for the $3 billion worth of preferred shares GM plans to sell, the sources said.
The robust demand suggests that GM will likely price its IPO around the top end of the $26 to $29 per share range and that the full greenshoe -- additional shares underwriters can sell to help stabilize the stock after it begins trading -- will be exercised, the sources said.
The full overallotment could take the total IPO amount to as much as $15.65 billion including both common and preferred shares, making it the second-biggest U.S. IPO ever after Visa Inc (V.N).
It would also cut the U.S. Treasury's stake to just over 40 percent. The Treasury currently owns 60.8 percent of GM common stock as a result of the automaker's $50 billion bailout.
GM is still accepting investor orders for shares in the IPO and is not expected to close the order books until early next week, the sources said.
The sources did not have permission to speak publicly and declined to be named.
ASIA, MIDDLE EAST BUY
GM is in the final stage of talks to sell equity to Chinese partner SAIC Motor Corp (600104.SS) as part of the IPO and is likely to reach an agreement over the weekend, three sources said. The stake is expected to be less than $2 billion, two of the sources said.
Middle Eastern and Asian sovereign wealth funds have also committed to a combined $2 billion stake, the sources said.
While selling a big chunk of shares to overseas state-backed investors such as SAIC could trigger a political backlash, GM's advisers and underwriters have argued those investors could help provide long-term stability to the price of GM's stock.
Retail investors are expected to account for about 20 percent of the IPO, two sources said. There is currently retail demand for $2 billion to $3 billion worth of shares, one source said.
(Reporting by Clare Baldwin and Soyoung Kim in New York and Philipp Halstrick in Frankfurt, editing by Matthew Lewis)
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