General Motors (GM) plans to sell just over $13 billion of shares in its IPO, people familiar with the matter said, cutting the US government’s stake while opening the door for investment by overseas state-backed investors.
GM will file the terms in an updated prospectus for its initial public offering with the US Securities and Exchange Commission on Tuesday, the sources said.
The company expects to sell 365 million common shares at between $26 and $29 each, raising between $9,5 billion and $10,6 billion, they said.
In addition, GM plans to sell $3 billion of preferred shares that would convert to common shares under mandatory provisions.
GM, which emerged from bankruptcy in July 2009 with the US Treasury as its majority shareholder, is likely to sell a combined $1,5 billion to $2 billion stake to four or five sovereign wealth funds, two of the sources said.
GM and the US treasury have repeatedly declined to comment on the details of the IPO citing US SEC regulations.
The IPO could value the entire company close to $60 billion, below the $67 billion needed if US taxpayers are to break even on the common stock held by the Treasury, another source said.
By comparison, Ford Motor has a market capitalisation of about $48 billion.
Toyota Motor Corp has a market value of about $120 billion.
The sources declined to be named because the preparations for the IPO are not public.
It was not immediately known by what ratio GM’s common stock would be split in advance of the IPO.
The Treasury, which holds a 60,8% stake in GM as a result of its $50 billion bailout, is prepared to take a loss on the initial sale of stock but hopes to break even over time as the stock appreciates, sources have said previously.
The GM IPO has long been expected to raise between $10 billion and $20 billion, making it one of the largest US stock offerings ever.
Visa Inc raised $19,7 billion in 2008 in the biggest US IPO.
GM’s IPO would allow the US Treasury to reduce its stake to 43,3%, excluding a likely overallotment option, two of the sources said.
If there is an overallotment, the IPO could raise another $1,5 billion, one source said.