GM's Biggest Investor Heads for the Door - TheStreet

GM's Biggest Investor Heads for the Door

Next week will bring a GM investor meeting and a registration statement, as the automaker moves towards its IPO.
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DETROIT (

TheStreet

) -- With its biggest shareholder strongly motivated to get out,

General Motors

is moving rapidly towards an IPO.

"This is an unusual IPO in the sense that most of the owners want out quickly," said veteran industry analyst Joe Phillippi of AutoTrends Consulting. "For the government, the investment is a political bone of contention, so the faster they can be gone, the better off they will feel."

General Motors has scheduled a financial conference for Tuesday, where CFO Chris Liddell and others will provide an update on GM's global business. Also, as soon as next week, the company will file a registration statement in preparation for an IPO, which could take place in November,

The Detroit News

reported.

Lead underwriters will be Morgan Stanley and JP Morgan Chase, the newspaper said. The government owns 60.8% of GM and will sell a share of that. Other shareholders include the United Auto Workers retiree health care trust fund (17.5%), the governments of Canada and Ontario (11.7%) and former GM bondholders (10%).

Analysts say the sale could raise $10 billion as an undisclosed portion of GM is sold. The market capitalization of

Ford

(F) - Get Report

is about $37 billion.

It remains to be seen whether the current owners' eagerness to sell will translate into a good price for new investors. "Obviously, the question will be where they try to price this," Phillippi said.

On the plus side, the economy is recovering, GM shed billions in cost in bankruptcy and its four core brands appear to have retained much of the market share of the larger, pre-bankruptcy company. However, unemployment remains high, the pace of the recovery is in doubt and auto sales remain far below pre-recession levels, particularly in Europe, where the market is ailing badly.

"At the end of the day, the market will tell them how to price, but I don't think they will try to maximize every last dollar," Phillippi said. "They will be willing to leave enough on the table

so that everybody can do well."

Edmunds.com

estimated Thursday that June auto sales will show a 9.5% decrease from May, while the seasonally adjusted annualized rate of sales will dip to 11.2 million, down from 11.6 million in May. Edmunds predicted GM's market share will be 20.6% of new vehicle sales in June, up from 20.5% in June 2009 and from 20.4% in May 2010.

-- Written by Ted Reed in Charlotte, N.C.