PARIS (AFP) – US auto maker General Motors (GM) will target small shareholders when it relaunches with an initial public offering, setting a low share flotation price of about 20 dollars, the Wall Street Journal reported on Thursday.
The IPO, which will be a turning point in the crisis which forced the giant group to declare bankruptcy in 2009, is expected in November.
The US Treasury is expected to sell only a small part of the 304 million shares it obtained when it saved the company.
The flotation price would probably be lower than the price needed by the US government to recover the money it put into GM. The Treasury would hope that economic recovery would result in a rise in the value of the shares.
The report explained that for the shares to be attractive to small shareholders, the issue price of each share would need to be low.
Institutional shareholders in general are not dissuaded by a high price per share, but small shareholders tend to find high prices per individual stock dissuasive. A company making an IPO therefore has a choice between offering fewer shares at higher initial prices to raise a given total amount, or more shares at lower prices for the same outcome.
The company has also set up a scheme for employees, staff in the sales network, and retired former staff, to subscribe for the shares by Internet, at the launch price, on condition that they buy a minimum number of shares, probably for a value of 1.000 dollars (709 euros).