The U.S. Treasury and General Motors Co. may choose a lead underwriter for the automaker’s initial public offering as soon as next week, two people familiar with the matter said yesterday.
GM, 61 percent owned by the U.S., must decide soon on an underwriter in order to sell shares publicly by the fourth quarter, said the people, who asked not to be identified revealing private information. The Treasury, which helped pay for the automaker’s restructuring last year, probably will have more say than the automaker in the selection, the people said.
Chief Executive Officer Ed Whitacre, appointed chairman when GM emerged from bankruptcy in July, has said the automaker may sell shares to the public as early as this year. GM needs to begin shortly to sell stock before the Nov. 2 congressional elections, said Joe Phillippi, president of AutoTrends Consulting in Short Hills, New Jersey.
“If they want to get it done in the fourth quarter, they have to start now,” he said yesterday in an interview. “This isn’t some little tech company. It’s a big story. This will be a global road show.”
Randy Arickx, a GM spokesman, said yesterday that he wasn’t aware of any imminent decision. Andrew Williams, a spokesman at the Treasury Department, didn’t return telephone calls or an e- mail request seeking comment yesterday before the Memorial Day holiday weekend.
GM and Treasury officials met with senior executives from Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley this month in Washington about hiring a lead underwriter, said one of the people.
Banks were asked questions on their strategy for the IPO, including how much stock they recommend selling, how much GM may be worth and what obstacles may emerge along the way, one of the people said.
Whitacre wants to secure an automotive lending unit before a public offering in the fourth quarter, people familiar with the plan have said. Detroit-based GM hasn’t had such a subsidiary since former CEO Rick Wagoner sold 51% of GMAC to private-equity firm Cerberus Capital Management LP in 2006.
Whitacre was installed as chairman by President Barack Obama’s automotive task force when it replaced more than half of the directors in July.
Choosing a lead underwriter in the next week or two would allow GM to file an S-1 initial registration form by July and sell shares in October or early November, one of the people said.
The Treasury has hired Lazard Ltd. for $500,000 a month to advise on selling its stake, according to a document on the Treasury’s website. The Treasury Department has about $40 billion of its $50 billion investment in GM tied up in the company’s equity.
GM Chief Financial Officer Chris Liddell said May 17 the automaker’s $865 million first-quarter net profit, the first since 2007, was a “good, useful step” on the way to an initial public offering that may come this year.
He also said at the time that it wouldn’t be necessary to have an automotive financing unit before going public.
GM management has been preparing for an IPO so they will be ready whenever the timing is right, said a GM executive who asked not to be identified discussing internal matters.