General Motors is boosting the size of its common stock offering by more than 30 per cent to $15.5 billion, two people familiar with the matter said, potentially making its landmark IPO the largest US offering ever.
The expansion comes in response to surging demand from investors, who had put in orders worth $70 billion for GM's common shares by late yesterday, the sources said.
GM's initial public offering, which will reduce the US Treasury to a minority shareholder in the top US carmaker, could raise nearly $23 billion if underwriters exercise the full overallotment option on both common and preferred shares.
The deal could also pay back over $15 billion to the US government, assuming that shares price at the high end of the range and all of the common stock on offer is sold.
That would take the Obama administration closer to break-even on a still controversial bailout that some critics had predicted would be a financial quagmire for taxpayers.
The largest US IPO to date was Visa Inc's $19.7 billion stock sale in 2008.
The increased size of the GM IPO reflects renewed confidence in the outlook for the carmaker less than a year and a half after dwindling cash and falling sales pushed it into a bankruptcy funded by the US Treasury.
GM plans to sell 478 million common shares for $32 to $33 each, raising about $15.5 billion at the mid-point, people familiar with the situation said. But the strong demand means that the IPO price is likely to settle at the high end of the new price range at $33, one person familiar with the matter said.
In another sign of the deal's positive reception, GM earlier yesterday increased the size of its preferred stock offering by $1 billion to $4 billion in a move that will strengthen its balance sheet by paying down pension debt - one of the concerns investors had cited heading into the IPO.
The final terms for GM's IPO are expected today. The stock is set to begin trading on the New York and Toronto stock exchanges tomorrow.
GM plans to file an amended S-1 document with the US Securities and Exchanges Commission detailing the increased number of shares on offer, the sources said.
Reuters