Shares
in General Motors have risen 7% on the first day of trading following the
carmaker’s record public share offering.
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.
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.
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.
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.'”
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%.
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.
“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.
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