* Demand for common stock now at $60 bln vs $10 bln filing
* Demand for preferred stock in excess of $3 bln - sources
* GM seen pricing at top end, full overallotment - sources
* SAIC stake size in GM IPO likely decided this weekend
* Sovereign wealth funds committed $2 bln - sources
(Revises first sentence, adds details on GM valuation,
By Clare Baldwin and Soyoung Kim
NEW YORK, Nov 12 General Motors Co's [GM.UL]
landmark initial public offering has already garnered $60
billion in orders, six times the amount it had planned to
raise, in a sign of healthy investor interest for the massive
automaker that was in desperate straits just over a year ago.
The robust demand for shares in GM, the American industrial
icon which filed for bankruptcy in June 2009, underscores
growing investor confidence that the auto industry has come
through the punishing downturn of the past two years with
sharply lower costs and higher profit potential.
The landmark IPO will likely price around the top end of
the $26 to $29 per share range and the full overallotment
option -- additional shares underwriters can sell to help
stabilize the stock after it begins trading -- will likely be
exercised, three people familiar with the matter said.
There is also "excess demand" for the $3 billion worth of
preferred shares GM plans to sell, the sources said.
The strong response also bodes well for upcoming initial
public offerings by other auto industry companies that
restructured in bankruptcy, such as Chrysler and auto parts
suppliers Delphi and Visteon, analysts said.
Just over a year after a politically unpopular $50 billion
bailout that left the U.S. Treasury with a 61 percent stake, GM
filed to sell about $10 billion worth of common stock and $3
billion of preferred shares. Such an offering would mark the
second-biggest U.S. IPO ever after Visa Inc (V.N) and one of
the largest, globally.
The full overallotment could take the total IPO amount to
as much as $15.65 billion. It would also cut the U.S.
Treasury's stake to just over 40 percent.
Pricing at the top end of the range would value GM at $43.6
billion based on 1.5 billion common shares. Assuming exercise
of warrants that are in-the-money, the share count jumps to 1.8
billion and GM's value rises to more than $52 billion.
For U.S. taxpayers to break even, GM needs a market value
of roughly $70 billion.
GM is still accepting investor orders for shares in the IPO
and is not expected to close the order books until early next
week, the sources said. The sources did not have permission to
speak publicly and declined to be named.
"There's already a tremendous amount of interest because
(GM) restructured themselves completely," said Mirko Mikelic, a
fixed-income portfolio manager at Fifth Third Asset Management,
who plans to buy GM's preferred shares.
ASIA, MIDDLE EAST BUY
GM is in the final stage of talks to sell equity to Chinese
partner SAIC Motor Corp (600104.SS) as part of the IPO and is
likely to reach an agreement over the weekend, three sources
said. The stake is expected to be less than $2 billion, two of
the sources said.
Middle Eastern and Asian sovereign wealth funds have also
committed to a combined $2 billion stake, the sources said.
In October, GM held meetings with Singapore-based GIC and
Temasek Holdings, Kuwait Investment Authority, Qatar Investment
Authority and the Abu Dhabi Investment Authority as a precursor
to the funds potentially buying into its IPO. [ID:nN10234127]
While selling a big chunk of shares to overseas
state-backed investors such as SAIC could trigger a political
backlash, GM's advisers and underwriters have argued those
investors could help provide long-term stability to the price
of GM's stock.
The U.S. Treasury will remain the largest shareholder after
the IPO. The governments of Canada and Ontario and the UAW VEBA
healthcare trust will also continue to hold shares, leaving
some to wonder whether the IPO will allow GM to shed its
"Government Motors" nickname.
"The market will obviously price all that in. Some
investors are going to say the investment is still worth it now
and others will say stay away. I think investors who stay away
will probably end up regretting that," said David Whiston, an
analyst at Morningstar.
"I think at $26 to $29 the shares look very cheap. I would
not be surprised to see the final pricing come up a little bit.
My own valuation is currently $44 per share."
Retail investors are expected to account for about 20
percent of the IPO, two sources said. There is currently retail
demand for $2 billion to $3 billion worth of shares, one source
GM was initially planning to allocate as much as 30 percent
of the IPO shares to retail investors but shifted some of that
allocation to institutional investors, one source said.
GM's IPO is expected to price on Wednesday. The shares are
expected to start trading on the New York and Toronto stock
exchanges on Thursday.
(For related stories on GM's IPO: [ID:nN11173673])
(Reporting by Clare Baldwin and Soyoung Kim in New York and
Philipp Halstrick in Frankfurt and Kevin Krolicki in Detroit,
editing by Matthew Lewis and Gerald E. McCormick)