NEW YORK (By Clare Baldwin and Soyoung Kim) – General Motors Co (GM.UL) pulled off the biggest initial public offering in U.S. history on Wednesday, raising $20.1 billion after pricing shares at the top of the proposed range in response to huge investor demand. Including an option that would allow underwriters to sell more shares, expected to be exercised in coming days, GM looks set to raise $23.1 billion, making it the biggest initial public offering ever. “What was that statement that used to float around? What’s good for GM is good for America? Well, I think in this case, what’s good for GM is good for the American taxpayer,” said Adrian Cronje, chief investment officer at Atlanta-based wealth management firm Balentine LLC. The strong response to the stock sale reflects a groundswell of investor confidence that GM is moving beyond its unpopular, taxpayer-funded bankruptcy in June 2009 with sharply lower costs and higher profit potential. The government’s stake in GM will drop to about 33 percent from 61 percent if all available shares are sold. The success of the IPO is good news for the Obama administration, which faced criticism for bailing out GM, and will help the automaker shed its “Government Motors” label. “General Motors’ IPO marks a major milestone in the turnaround of not just an iconic company, but the entire American auto industry,” President Barack Obama said in a statement. The stock will begin trading on Thursday on the New York and Toronto exchanges, and underwriters expect the shares to gain 10 to 20 percent on the first day. Auto industry executives and analysts said the reversal in Wall Street sentiment toward GM pointed to renewed confidence in an industry that was hit hard by the credit crisis of 2008. That is a positive sign for a range of auto-related companies, including Chrysler, that are looking to tap the credit and equity markets in coming months, analysts said. “You’re not in GM for a three-month investment,” Tim Leuliette, a director at auto parts maker Visteon Corp (OTC BB:VSTO.OB – News), said at the Reuters Autos Summit. “You’re into GM because a critical element, a critical building block of the economy, has significantly repositioned itself to be competitive. United Auto Workers President Bob King, whose union stands to reap $3 billion from the IPO for an affiliated trust fund for retiree health care, said GM’s factory workers had an interest in seeing its shares perform well. “The higher that stock price is, the more money General Motors has got to invest in products, new facilities,” King told Reuters. GM sold 478 million common shares at $33 each, raising $15.77 billion, as well as $4.35 billion in preferred shares, more than the initially planned $4 billion. More than 20 percent of the IPO — or more than $3 billion worth of stock — went to individual investors, making it the largest retail placement ever in value terms, a source familiar with the situation said. FROM BLUE-CHIP TO BAILOUT AND BACK The stock sale represents a big step toward taxpayers recouping the government’s $50 billion rescue of the 102-year-old company, which had fallen from blue-chip status to bailout basket case in recent years. GM earned $5 billion in the first nine months of 2010 and is on track for its first full-year profit since 2004. Earnings will accelerate if U.S. auto sales continue to creep back up toward the 15-million or 16-million vehicle-per-year sales rates the U.S. industry last saw in 2007, analysts say. Sales plunged to 10.4 million vehicles in 2009 and have staged a slow recovery to near 11.5 million this year. “The automotive markets are not yet at their best, far from that, but they’re certainly recovering from last year,” said Xavier Mosquet, senior partner at the Boston Consulting Group and an adviser to the government in the GM restructuring. In a road show for investors spearheaded by GM Chief Executive Dan Akerson and Chief Financial Officer Chris Liddell, the automaker has emphasized both its sharply lower costs and its exposure to key growth markets like China. One of the open questions was whether GM’s China partner, state-owned SAIC Motor Corp Ltd (Shanghai:600104.SS – News), was able to move beyond a last-minute regulatory hurdle that threatened its plans to take a 1 percent stake in GM. Under a tentative deal, SAIC had agreed to invest $500 million to $1 billion in GM pending Chinese government approval, people with knowledge of those discussions said. As of late on Wednesday, China’s Ministry of Commerce had not approved the SAIC investment, said three people familiar with the matter. Sources have said that sovereign wealth funds in the Middle East and Asia are among the investors. GOVT EXIT TO TAKE YEARS A study released on Wednesday by the Center for Automotive Research estimated that the Obama administration’s aid to the auto industry had saved over 1 million jobs by sparing the automaker from liquidation. U.S. officials and advisers said the GM IPO represented a validation for the Obama administration’s intervention. At its IPO price, GM will be valued at about $63 billion, based on a diluted share count. The U.S. Treasury will remain GM’s largest shareholder for now. U.S. officials have said unloading the entire stake is likely to take several years. The stock price will need to rise by 47 percent to near $49 — about what it costs to fill the gasoline tank of a 2010 Chevy Malibu — for the government to break even on its follow-on stock sales. At $49 per share, GM would have a market value of more than $90 billion. In comparison, its closest rival, Ford Motor Co (NYSE:F – News), has a market capitalization of $59 billion after a rally that has sent its stock up 65 percent this year. The GM stake held by Canada could fall from 12 percent to just over 9 percent. The retiree health care trust affiliated with the United Auto Workers union could see its stake drop from almost 20 percent to 13 percent. With overallotments, GM’s IPO would eclipse the record $22.1 billion raised by Agricultural Bank of China (Shanghai:601288.SS – News) in its IPO in July. The previous top U.S. IPO was Visa Inc’s (NYSE:V – News) $19.7 billion stock sale in 2008. Morgan Stanley, JPMorgan, Bank of America and Citi are listed as lead underwriters on the offering. Barclays Capital, Deutsche Bank, Goldman Sachs, Credit Suisse and Royal Bank of Canada are the other major underwriters. Lazard and Boston Consulting Group served as advisers to the Treasury. Evercore Partners advised GM. (Reporting by Kevin Krolicki in DETROIT; Additional reporting by James Kelleher in DETROIT and John Crawley in WASHINGTON; Editing by Matthew Lewis, Ted Kerr and Anshuman Daga) Copyright 2010 Thomson Reuters. Click for Restrictions .
The best way to win big with a new product is to ignore what customers say they want 9) Sitting on a big idea–as opposed to acting on it immediately–can be the best way to insure the idea bears fruit 10) The best way to predict the future is to invent it Answers 1) False. Phenomena such as Moore’s Law, (computers double performance at the same price every 18 months) allow accurate predictions based upon technology as far as 10 years into the future 2) True. Imagining the far future helps you discover near term opportunities that you wouldn’t have otherwise thought of. Relaxing assumptions about what is possible lets you stumble upon “impossible” opportunities that are, in fact, very possible 3) False. It takes no more effort to surface big, game changing opportunities than to identify small, near term wins. All that’s needed to spot big wins is to use simple tools such as “Blind spot” analysis–which uncover big opportunities hiding in plain sight– in the course of your normal way of doing business. 4) False. Major advances only occur when visionaries harness, vs. fight, human nature. For example, Jean Monnet slowly built the European Union by by cleverly appealing to tribal instincts of Europeans, persuading them to focus their “us vs. them” attitudes on non-Europeans instead of on intra European rivalries 5) True. People make decisions on emotion, not logic. Passionate arguments, especially those bolstered by rich visual and audio presentations, can move even conservative audiences to action 6) False. Although you can occasionally luck out with a single big bet, the surest way to build a big future, is to “fail fast” with many small, quick experiments. World Class innovators such as Wal-Mart and Proctor and Gamble do this to manage constant change in their businesses and uncertainty about future consumer needs. 7) False. Our own unconscious beliefs, perceptions and attitudes (such as learned helplessness) and aversion to “inconvenient truths” are the biggest obstacles to change. 
