General Motors Prepares for Largest US IPO Since Visa in 2008

Strategic Insights -

General Motors is on the verge of releasing its initial public offering (IPO), a move that will see the automaker re-emerge from the US Treasury's financial support. The IPO, valued between $10 billion and $20 billion, would make it the largest US IPO since Visa's $19.7 billion offering in March 2008. This significant step is crucial for General Motors to separate from its Chapter 11 bankruptcy protection and cut ties with the government.

Key Takeaways:

  • Morgan Stanley and JPMorgan Chase & Co are likely to be the lead underwriters in General Motors' IPO, with a role that offers prestige rather than substantial fees.
  • The US Treasury Department owns approximately 61 percent of General Motors' common shares, acquired after the automaker filed for bankruptcy in 2008.
  • The IPO is seen as a key step for General Motors to end its government support, with analysts estimating the company could be worth over $80 billion post-IPO.
  • The automaker has faced a stigma due to its connection with the US government, with some consumers viewing it as "Government Motors" and subsequently opting for competing brands.
  • Morgan Stanley has advised the US Treasury on select restructuring matters during the financial crisis, including the sale of its Fannie Mae and Freddie Mac stake.
  • The IPO will allow taxpayers to realize a significant paper profit, should General Motors' estimated $80 billion worth materialize post-IPO.

Statistics:

  • The IPO could be valued between $10 billion and $20 billion, potentially making it the largest US IPO since Visa's $19.7 billion offering in March 2008.
  • The US Treasury Department owns nearly 61 percent of General Motors' common shares.
  • Analysts have estimated General Motors to be worth over $80 billion post-IPO.

Sources:

  • "Benchmarks for Banking, Chemicals and Real Estate Ratings", Thomson Reuters [date not specified]
  • [No additional sources mentioned]