General Motors to improve shareholder IPO price and size of the benefits assigned to the U.S. government did not

Usually a company raised an initial public offering (IPO) price and size is a good thing. This means that shareholders generally benefit more, the company has more money in storage, or both and with them. But for General Motors who is not so simple. General Motors decided to raise the IPO price and size did not account for the U.S. government actually do any good.

This is mainly because existing shareholders are losing money for cash. For example, the U.S. Treasury Department has a 61% stake in General Motors. According to the initial plan, the Treasury can use the original price of 26 U.S. dollars per share, 263,500,000 shares were sold - -26 U.S. dollar is the bottom of the initial price range. If the taxpayer to the Treasury through the sale of all remaining relief funds holding back, the common stock to be turned up twice Caixing. the Canadian government's holdings in a similar situation.

GM IPO price of 33 dollars per share increased to reduce the government's potential losses in the IPO, it seems to echo the Ministry of Finance called for attention to investment returns, not simply reduce the cost of ownership, excluding the position.

But General Motors on Tuesday then decided that the issuance of more than initially planned 110 million shares, made the situation reversed. Increase the issued shares seems almost all from the U.S. government. Assuming the Government to sell 100 million shares, it will be though more cash, but the price of the remaining shares or even slightly higher than 52 U.S. dollars per share to break even on investment for taxpayers.

Ministry of Finance will need to dispose of the shares will be reduced. Assuming no other adjustment of the future, taking into account the impact of preferred stock dilution, and the price paid within the pension account factors such warrants, IPO shares after the government will fall 26%. Unless the common stock price rose sharply Otherwise, there are 10.5 billion of taxpayer money has not yet recovered.

Of course, a strong performance of the IPO, must be shareholders of General Motors consultants and the Government need to achieve the goal. General Motors smooth return to the open market, but also help raise the credibility. But the short term, the economic side the most obvious winners are the investment bankers: IPO range of the latest high-end prices, they earn the cost will be close to double to 135 million. (end)


- Translation proofreading Cai Meizhen


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