GM will soon have its IPO in a bid to pay off its creditors after declaring chapter 11 bankruptcy in 2009, the IPO is expected to raise around $10 billion USD in funds that will assist the worlds second largest automaker with overcoming its debt issues and piloting it towards a brighter future. The US Government invested $50 billion USD into GM in 2009, and the share price on opening day is expected to be around the $24.50 a share marker, which means that the US government could potentially loose money on the deal, however GM’s Chinese partner in SAIC is expected to make a clean sweep of GM shares with its cash rich pockets.
SAIC currently has 37.9 billion RMB in cash reserves, and had an operating cash flow of 11.97 billion USD over the first 9 months of 2011, this large slush fund will no doubt aid SAIC when it comes to buying into its American partner. GM will officially go public on November 18th 2010, although SAIC have not yet publicly announced their plans to buy into GM, the closeness of the two companies over the past few years which has saw them build cars and also carry out joint R&D, will surely mean that SAIC will be ready with their wallet out.
Due to political correctness, I doubt SAIC can openly have a hand in this IPO. Obama team will face pressure from the Republicans, China Threat is a popular issue nowadays.
There are may means to steer away from this embarrassment in GM, SAIC can use third party to get involved in this IPO. Lots of investment bankers will help, don’t worry !!!
@hk: it would be good for GM if SAIC got involved. Actually, it’s the only way. If not now, a Chinese company will buy itself into GM in a decade.
SAIC buying into GM makes more sense everyday as the two are becoming more and more entwined in their activities. Many investors were burnt before when GM went under so having a solid NEW investor like SAIC will help both in the long run and give others more confidence in buying GM stock going forward.
Without SAIC and China’s booming industry GM would have likely been shoved down a hole and forgotten about.