• Jul 19, 2010
At some point in the not too distant future, General Motors will return to being a publicly traded company, with the timing likely to be based in part on both business and politics. In May, the automaker began soliciting investment banks to handle the sale of its stock. With what will likely be one of the largest public stock offerings of all time, the banks are undoubtedly salivating at the potential fees they will collect in the process.
With the GM sale being potentially huge and IPOs still relatively scarce during the economic downturn, the automaker feels it has some leverage with the banks. As a result, it's asking the money-changers to be creative about how they'll market the sale and be compensated. One potential option is for banks to use some of the fees to purchase GM vehicles or subsidize purchases by employees. This will both lower the cost to GM and the U.S. Treasury, while improving GM's revenues. One particular benefit would be getting wealthy bankers to take a serious look at GM vehicles, possibly helping the automaker get a better demographic. Or something...

[Source: Bloomberg Businessweek]


I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.


    • 1 Second Ago
  • 32 Comments
      • 4 Years Ago
      I don't know why the banks would accept a quickly depreciating liability rather than cold, hard cash...
        • 4 Years Ago
        Aah, so it's the old, "We'll give our IPO business to whoever is willing to buy the most GM vehicles" trick.
        • 4 Years Ago
        Here is a section from the Bloomberg article:

        ---Banks were asked to discuss (in the RFP) “ideas as to how we can use the IPO to reposition GM and its vehicles within the investment community including your firm’s willingness to reinvest any portion of any underwriting fees into the purchase of GM vehicles for your employees and/or company use.”---

        GM is evaluating potential investment banks (JP Morgan and Morgan Stanley) and is simply working the best deal. Nothing may come of this but why not ask?
        • 4 Years Ago
        You should read the original article. Autoblog's paraphrasing is somewhat misleading. GM is not suggesting the banks take payment in cars rather than cash - at least not directly. The banks were being asked to re-invest a portion of the IPO fees by purchasing cars or subsidizing purchases for employees. Maybe semantics, but its not like GM is going to send a truck of cars over to Morgan Stanley.
        • 4 Years Ago
        Ahh i see. That makes more sense, although I don't know if the banks will feel particularly compelled to accept GM's request. But it could make sense for a firm that has fleet vehicles that need to be replaced.
      • 4 Years Ago
      The main point I see is that it will help further reduce inventory.
        • 4 Years Ago
        It will also count as a sale, which is good for them. When I was in school, the automotive research center on campus would sometimes cooperate on a project with an OEM. In one we used 2 Ions donated by GM, but they didn't just show up one day on a truck. The school had to go to a dealership and buy them. GM footed the bill, but this way it counted as a sale through a dealer.
      R. M. Blythe
      • 4 Years Ago
      Just heard from my close collegue at Toyota. They want to Buy GM and trash auditors and fire all management, replace them with real automotive guys. To give an example, I represented the biggest Toyota distributorship in the World...Inchcape. And I have met Toyoda San.
        • 4 Years Ago
        @R. M. Blythe
        That's just about the funniest thing I've read all day.

        "real automotive guys" -- AT TOYOTA.

        Sorry, but what exactly does Toyota make that has even passing appeal to any "real automotive guys"?

        Toyota Supra Twin Turbo? Nope, and it wasn't even as good as the Nissan 300ZX TT.

        Toyota MR2? Nope.

        Toyota Celica? Nope.

        Oh I know, you must be referring to the all-new Sienna SE!

        Yeah, that's a real winner among the "real automotive guys"...
      • 4 Years Ago
      Well, since the govt. now pretty much owns the car company and the banks it could just mandate this and force everyone to comply. The union will be happy for the employment and the sales figures will get a nice temporary boost, possibly in time for some election somewhere.
        • 4 Years Ago
        Yeah, that is not even remotely possible or based in reality.
      • 4 Years Ago
      If I were them, I'd ask too. Why not try to get the best deal possible?

      But I don't think I'd accept if I were an investment bank.
      • 4 Years Ago
      Why doesn't GM issue "right to buy IPO shares" to anyone buying a GM car. It would cost them nothing and give an opportunity to the average investor to buy an IPO at the issue price.
      • 4 Years Ago
      These are investment bankers. They might be willing to deal for a Aston Martin Rapide, not an Impala.
        • 4 Years Ago
        For the price of an Impala, getting a larger chunk of the GM IPO to buy that Aston? No brainer.
      • 4 Years Ago
      Neat gimmick.
      R. M. Blythe
      • 4 Years Ago
      This is not the first time GM has tried to buy themselves back in the market with Bribes. I was a GM Dealer for GMODC Japan, Singapore, Guam and Hawaii. GM stands for GROSS MISS-MANAGEMENT. When are they going to pay you back?
      • 4 Years Ago
      Like any self respecting Investment Banker would drive anything but a Bugatti Veyron.
        • 4 Years Ago
        Most "real" rich people do not really buy conspicuous items like a Veyron. It's a huge waste, really, because it's doubtful you're daily driving it, or even weekend driving it. At that point it becomes a very expensive garage trophy - and there's no financial sense in that. Rich people like that also don't have a lot of spare time - they're generally always working in some fashion.

        It's celebrities and arab sheiks who mostly play the conspicuous consumption game.
      • 4 Years Ago
      GM wants to show to some of those educated idiots that GM has got cars that are just as good as BMW's and those other German cars.
      • 4 Years Ago
      Doubt the banks would agree, but it would definitely be a win for GM. They get a cash infusion (from the IPO) and get to 'sell' product directly from that.
    • Load More Comments