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GM shares jump after record public offering GM shares jump after record public offering
(40 minutes later)
Shares in General Motors (GM) have risen 7% on the first day of trading following the carmaker's record public share offering.Shares in General Motors (GM) have risen 7% on the first day of trading following the carmaker's record public share offering.
Shares rose to $35.53 in the first few minutes of trade in New York, having been priced at $33 by the company. Shares rose as high as $35.99 in early trade in New York, having been priced at $33 by the company.
GM raised $20.1bn (£12.6bn) through its offering, making it the largest share sale in the US to date.GM raised $20.1bn (£12.6bn) through its offering, making it the largest share sale in the US to date.
President Obama called the sale a "major milestone" for both the company and the US car industry.President Obama called the sale a "major milestone" for both the company and the US car industry.
The amount raised could rise to a world record $23.1bn if underwriters exercise an option to sell more shares.The amount raised could rise to a world record $23.1bn if underwriters exercise an option to sell more shares.
Surprisingly strong investor demand had allowed the carmaker to lift the price of the shares on offer to $33 from the $26 it had initially hoped for.Surprisingly strong investor demand had allowed the carmaker to lift the price of the shares on offer to $33 from the $26 it had initially hoped for.
GM is returning to the market after a $50bn government bail-out.GM is returning to the market after a $50bn government bail-out.
'Historic milestone' Different ballpark
The day's trading began on Wall Street when GM chief executive Dan Akerson rang the opening bell on the New York Stock Exchange.
"There's a lot of work to do, but today is the beginning of the new company," said Mark Reuss, GM's North American president.
Government officials said the company's strong market debut showed they had made the right choice in rescuing the carmaker.
"This is a bit better than people had been projecting. As to a year ago, it's not even in the same ballpark," Ron Bloom, the Treasury official in charge of the GM investment told Reuters.
"A year ago, people said, 'You have no exit, you have no strategy. This company is not fixed.'"
Back in profit
The carmaker has raised $20.1bn from the sale of the shares. However, an over-allotment option, which will be settled over the next 30 days, would add $3bn to that figure, taking GM beyond the $22.1bn raised by the Agricultural Bank of China's market launch.The carmaker has raised $20.1bn from the sale of the shares. However, an over-allotment option, which will be settled over the next 30 days, would add $3bn to that figure, taking GM beyond the $22.1bn raised by the Agricultural Bank of China's market launch.
The share sale, known as an initial public offering (IPO), will allow the US government reduce its current 61% stake in the company to as low as 33%.The share sale, known as an initial public offering (IPO), will allow the US government reduce its current 61% stake in the company to as low as 33%.
GM's vice chairman and chief financial officer, Chris Liddell, said: "As we prepare to enter the equity markets, all of us at GM are excited about this historic milestone. We are especially appreciative of those who stood by us through the toughest times."
GM returned to profit this year for the first time since 2004. The company made $5bn during the first nine months of this year.GM returned to profit this year for the first time since 2004. The company made $5bn during the first nine months of this year.
Scott Painter from the US car comparison site Truecar.com believes the IPO is a sign of how well the economic recovery is going.Scott Painter from the US car comparison site Truecar.com believes the IPO is a sign of how well the economic recovery is going.
"I think GM having a strong IPO and pricing it at the high end of the range certainly speaks well of America and confidence in America, and GM is a really good indicator of everything that we've been through over the last couple of years and how the recovery is working out," he said."I think GM having a strong IPO and pricing it at the high end of the range certainly speaks well of America and confidence in America, and GM is a really good indicator of everything that we've been through over the last couple of years and how the recovery is working out," he said.