Lehman ABS CorTS 2001-08 7.375% General Motors (CCYPQ)

[marayatano]

Nice, multiple times oversubscribed...

GM has orders for $60 billion in stock: sources

By Clare Baldwin and Soyoung Kim

NEW YORK | Fri Nov 12, 2010 3:21pm EST

NEW YORK (Reuters) - Investors have put in orders for $60 billion of common stock in General Motors Co's initial public offering as of Friday, six times the amount being offered, three people familiar with the matter said.

Investor demand for GM's common shares is still rising, the sources said. GM filed with U.S. regulators for the sale of only about $10 billion worth of common stock.

There is also "excess demand" for the $3 billion worth of preferred shares GM plans to sell, the sources said.

The robust demand suggests that GM's IPO will likely price around the top end of the $26 to $29 per share range and that the full overallotment option -- additional shares underwriters can sell to help stabilize the stock after it begins trading -- will be exercised, the sources said.

The full overallotment could take the total IPO amount to as much as $15.65 billion including both common and preferred shares, making it the second-biggest U.S. IPO ever, after Visa Inc.

It would also cut the U.S. Treasury's stake to just over 40 percent. The Treasury currently owns 60.8 percent of GM common stock as a result of the automaker's $50 billion bailout.

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.

Dan Cheng, a consultant at A.T. Kearney, said GM's reception could show that investors are more confident that the auto industry has come through the crisis of the past two years with sharply lower costs and higher profit potential.

"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 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.

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 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 said.

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.

"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," said David Whiston, an analyst at Morningstar.

(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)

http://www.reuters.com/article/idUSTRE6AB43H20101112