General Motors Co. shares on Thursday closed at $34.19, up 3.6% from the $33 IPO price set a day earlier but down 2.3% from its $35 opening price.
“My understanding is something close to $4 billion was allocated to retail (investors), which would be the biggest retail allocation of any IPO in history,” Chris Liddell, vice chairman and CFO of the Detroit-based automaker, said in a teleconference this morning.
“Essentially all of the largest mutual funds … virtually all of them put orders in (for GM stock in the IPO), and I hope they certainly got an allocation,” Mr. Liddell said.
“We can't talk specific names.”
“It's a marquee listing of mutual funds in North America,” Dan Akerson, GM's CEO, said in the teleconference. “There is no question there are hedge funds as part of the new shareholder base … high-quality hedge funds,” Mr. Akerson added.
“There was very strong retail demand … and we were, through the underwriters, very keen to see as much retail participation as we could,” Mr. Liddell said.
“Sovereign wealth (fund) interest was relatively high, but their final allocation I believe was relatively low” and “was pretty modest in the end,” Mr. Liddell said. “Ninety-percent-plus of the shares as I understand it were allocated” to North America investors.
Mr. Akerson said, “It's a great day for everyone with a stake in GM — employees, retirees, dealers, suppliers, taxpayers and, yes, new shareholders. Going public is an important milestone on our way to be a new and different and better GM.”
Mr. Liddell noted, “We used to be a $100 billion finance company and a $100 billion pension plan with a small car company attached. We have to get away from that business model. We have to get back to making cars, and having that drive the economics of the business. One of way of doing that is having a balance sheet that is debt-free and a pension plan that is fully funded and defeased.”
In a statement, President Obama said: “American taxpayers are now positioned to recover more than my administration invested in GM. General Motors relaunched itself as a public company, cutting the government’s stake in the company by nearly half.”
GM IPO common stock was sold by three shareholders, selling 549 million shares, raising a total of $18.14 billion for the sellers. GM did not receive any proceeds from the common stock sale.
The $45 billion UAW Retiree Medical Benefits Trust, Ann Arbor, Mich., sold 102.3 million shares, potentially raising $3.38 billion. Eric Henry, chief investment officer of the UAW trust, a voluntary employee beneficiary association, couldn't be reached for comment on how the proceeds would be invested.
The Treasury Department sold 412.3 million shares, potentially raising $13.6 billion.
Canada GEN Investment Corp., a wholly owned subsidiary of Canada Development Investment Corp., sold 35 million shares, potentially raising $1.15 billion.
Eric Henry, chief investment office of the UAW VEBA, said in a statement in response to an inquiry, “We'll fund existing equity and core fixed income.” He said he doesn't know yet how much will go to which managers. “We'll rebalance to targets.”
As a result of the sale, the publicly traded portion represents 36.6% of GM stock, while the UAW VEBA stake in GM falls to 10.7% from 17.5%; the Treasury's stake to 33.4% from 60.8%; and the Canada GEN stake, to 9.3% from 11.7%.
The holdings of Motors Liquidation Co., an entity set up to resolve creditor claims and liquidate predecessor General Motors Corp.'s remaining assets and liabilities, would remain at 10%. The ownership stakes excludes potential stock from warrants held by the UAW VEBA and Motors Liquidation.
Also, $4 billion in pension plan contributions announced by GM in October will be funded from GM's concurrent sale on Thursday of 100 million shares of preferred stock, raising $5 billion, and made shortly after the stock sale's completion, according to a GM filing with the SEC.
The contribution of $2 billion in common stock, estimated by GM at 60.6 million shares, will also be made as soon as the IPO is completed but contingent on approval from the Labor Department. GM expects Labor Department approval in the “near term,” the filing said.
The GM pension plans had $85.9 billion in assets and were underfunded by $10.3 billion.