By Agency reporter

Thursday, 18 Nov 2010

General Motors Company raised the common stock portion of its initial public offering by 31 per cent on Wednesday after a surge of investor interest, putting the deal on track to raise as much as $22.7bn.

Reuters reported from New York on Wednesday, that the announcement by the top United States automaker comes a day after it raised the price range for the IPO and increased the preferred shares on offer by a third to $4bn.

The revised terms of the IPO could make it the largest stock offering ever in the US market and could take US government ownership of the automaker down to as little as 33 per cent from 61 per cent.

The moves came after GM received orders worth about $70bn for the common stock portion of the offering as of late Tuesday, a source familiar with the situation said.

The higher pricing on the GM stock sale represents a step toward minimising the cost of a $50bn US government rescue of the 102-year-old company, which had fallen from blue-chip status to bailout target in recent years.

GM now plans to sell 478 million common shares for $32 to $33 each and $4bn worth of preferred shares, according to an amended filing with US securities regulators on Wednesday.

The automaker had initially filed to sell 365 million shares for $26 to $29 each and $3bn worth of preferred shares.

If the underwriters exercised an overallotment provision, the IPO could raise $18bn in common stock and $4.6bn in dividend-paying preferred shares in GM.

The strong Wall Street reception for GM represents a win for the Obama administrations after it chose to restructure GM in an unpopular, 2009 taxpayer-funded bankruptcy that left the automaker with the stigma that it had become ”Government Motors.”

Source: Punch