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Archive for Sunday, November 14, 2010

China to play role in General Motors IPO

November 14, 2010

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— Among the banks helping General Motors with its initial public stock offering next week are two identified by initials only: ICBC and CICC.

Americans uncomfortable with U.S. government ownership of General Motors may want to hear more: One of those banks is the Industrial and Commercial Bank of China, one of China’s four big central government banks. The other, China International Capital Corp., is a joint venture run primarily by Central Huijin Investment Ltd., an arm of the state, and Morgan Stanley.

This is the first time Chinese government banks have participated in a major U.S.-issued IPO, according to IPO tracking firm Dealogic. The banks are listed as co-managers in the offering, meaning they will sell a portion of the new shares.

Chinese automaker SAIC, GM’s partner in China, is finalizing plans to buy a roughly 1 percent stake, worth about $500 million, in GM’s IPO, the Wall Street Journal reported Friday. SAIC is owned by the Shanghai city government.

Other foreign investors that are interested include several sovereign wealth funds located in the Middle East and Asia. The Journal says those funds, which manage the finances of royal families and some nations, could invest $1 billion in GM’s IPO.

There could be political backlash for President Barack Obama, who has spent the past week in Asia addressing economic issues, like currency exchange differences between the U.S. and China.

Obama has argued that China artificially deflates its currency, the yuan, in an attempt to make its exports cheaper.

Many Americans were unhappy when the U.S. bailed out GM, calling the company “Government Motors.”

GM’s Thursday stock offering will reduce the U.S. Treasury’s stake in the company from 61 percent to 43 percent, and will help payback the more than $50 billion that taxpayers invested in GM to keep it from collapsing. More stock offerings will happen in the next year or so, letting the government fully divest from the automaker.

“It’s a very political topic, but what Americans need to remember is that General Motors is an international company,” says Rebecca Lindland, an analyst with IHS Automotive. “If we want to get our money back, we need to understand that they have to do business on a global basis.”

The U.S. Treasury has been clear that international investors are welcome to invest in GM, and many outside the U.S. are considering taking stakes in the company.

Comments

CorkyHundley 4 years, 1 month ago

The Dude needs China to take care of him. GM is the Dude's baby. With his ace business acumen, the Dude must have had a "messaging problem" with the Chinese, Asia, Europe,...the world in Seoul. He is being taken advantage of by everyone on the planet because he didn't explain himself in terms that they could understand.

In this country, according to agnostics, independents, Democrats and merrill, it's Bush's fault. But, fear not. China will save him because they love him. Everyone on the planet loves a narcissist. There is absolutely no one in the world experiencing schadenfreude with America's problems because of the Dude' misunderstood naratives. GM China is the answer.

just_another_bozo_on_this_bus 4 years, 1 month ago

So, where did the "Dude" moniker come from? To my knowledge, he doesn't drink white russians.

But here's a newsflash-- US dependence on China began long before Obama, and will continue long after. Not even Beck or Palin can change that.

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