General Motors Co is on track to move ahead with its initial public offering during the week of Nov. 15 after a recent round of meetings with sovereign wealth funds, however the company has said it has not determined a price range for the stock and could not confirm that the IPO would take place in November.
The GM IPO has been closely watched both because of its expected scale and because of the involvement of the U.S. government, which is looking to the landmark stock offering to reduce its nearly 61 percent stake in the automaker.
Bankers representing GM met with sovereign wealth funds in Asia and the Middle East over the past two weeks to make the case that the automaker has emerged from its 2009 bankruptcy as a leaner and more nimble competitor, two of the sources said.
Analysts from the 10 underwriter banks involved in the GM IPO began a series of meetings aimed at reaching a consensus on the market value the top U.S. automaker, two sources said.
After analysts come to consensus on that valuation, GM will offer investors a discount of 20 percent from that level in pricing shares for the IPO, multiple sources said.
That margin of discount is part of a standard practice in IPOs to reward investors for taking a risk on a new issue.
GM needs to have a market valuation of about $67 billion if U.S. taxpayers are to break even on the common stock the U.S. Treasury holds.
The U.S. Treasury is expected to be the major seller of common stock in the GM IPO and is prepared to take a loss on the initial sale of stock, sources have said.
The governments of Canada and Ontario will likely follow the lead of the U.S. government as sellers, two sources said. As part of the GM bailout, Canada offered the automaker funding and took a stake of 11.7 percent in return.
It remains unclear if a trust fund affiliated with the United Auto Workers union will sell part of its stake in the IPO. The union trust, which was established to pay for retiree healthcare costs, holds 17.5 percent of GM.
M was restructured in 2009 with a $50 billion bailout from the U.S. government.