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Wed November 17, 2010
GM IPO could break records
The Wall Street Journal is reporting that GM's IPO tomorrow could be a biggy:
General Motors Co. said Wednesday that it will increase the size of its initial public offering by about 30% to 478 million shares, which could make it the largest global IPO in history.
The automaker's biggest investor, the United States Government, is anxious to sell off a good portion of its stake. We, the taxpayers, own about 61% of GM right now. After tomorrow's stock sale, we're expected to own around 26% of the company.
The GM IPO could be the biggest IPO in history. The WSJ article says according to Thompson Reuters, the total value of the GM sale could be $22.8 billion, "eclipsing the $22.1 billion IPO by Agriculture Bank of China in July 2010."
Some consumer groups have criticized the sale saying the stock price will be too low. The say taxpayers won't be able to recoup their investment.
Many analysts believe that the IPO is being driven by a government desire to exit from GM ownership as soon as possible, even at the expense of better recoupment of the taxpayer investment. Investor prudence thus counsels for maintaining the government's current share, and delaying a sell off so that the government can capture likely improved returns in the future.
The letter didn't work, and it remains to be seen whether taxpayers will take a loss, or not.