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GM prices shares at $33, raising expectations for a big day tomorrow

November 17, 2010 |  2:09 pm

General Motors Co. is on the road to the biggest-ever initial public stock offering.

The automaker stands to raise as much as $22.7 billion in its highly anticipated IPO on Thursday morning, after pricing its deal at $33-a-share this afternoon. That’s the high point of a range it boosted just two days ago amid surging investor demand.

The deal could surpass the previous IPO record of $22.1 billion set by a Chinese bank this year, a reflection of both the automaker’s improbable turnaround and investors’ thirst to cash in on a red-hot deal.

“This was a feeding frenzy,” said David Menlow, president of research firm IPOfinancial.com.

The biggest beneficiary of the increased offering is the U.S. government, which could reap up to $13.6 billion, about $3 billion more than it expected just a few days ago.

Combined with the $9.5 billion that GM already has paid back or soon will, taxpayers will have recouped $23.1 billion of the nearly $50 billion they forked over to rescue GM last year.

The IPO faces two big tests when trading opens Thursday morning on the New York Stock Exchange.

The first is whether the opening price will exceed the $33 IPO price, as most analysts expect it will. The second is whether it will close above its opening price, a prospect that is certainly possible but far from guaranteed.

-- Walter Hamilton

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