Submitted 11/17/2010 by Thomas DeFresart

On Thursday morning, General Motors will attempt to set an IPO record when it raises a minimum $20.1 billion in its second initial public offering. The auto maker has priced its new common shares at $33, which is at the peak end of its recently updated price range.

The shares will begin trading Thursday, November 18th under the legacy GM ticker on the New York Stock Exchange. Initially, GM had expected to raise about $13 billion when it first announced its pricing details for the IPO in early November. Thanks to an increased demand over the past week, mostly from the massive mutual fund companies, GM has been able to raise this target by over 50 percent.

"All of us at GM are excited about this historic milestone," said GM Chief Financial Officer Chris Liddell in a statement announcing the pricing. "We are especially appreciative of those who stood by us through the toughest times." Unfortunately for some, the previous stock holders who stood by GM prior to its bankruptcy will not receive any new GM stock to replace the old shares that went to zero.

GM had originally planned to sell the new shares between $26 and $29, but increased the estimate on Tuesday to $32 to $33. Demand has been so strong that GM will easily sell all its shares at the high end of $33. On Wednesday morning, GM also announced that it would also sell an additional 31% more shares than originally planned, as well as increase the amount of preferred shares sold to $4.4 billion.

What does this all mean to you, the American tax payer? Well, just under $12 billion of the proceeds from the IPO will come back to the US Treasury, which claimed a 61% stake in the company in July 2009 when it shelled out a staggering $49.5 billion to keep GM alive during the bankruptcy proceedings. After the IPO, the Treasury’s ownership will fall from 61% to 33%. It is still to be determined if this bailout will cost or make the taxpayers money. This will depend on how well the company performs in the near future.

To date, GM has managed to repay $9.5 billion of the $49.5 billion.

Since the demand has been so great, it is possible that the $20.1 billion expected to be raised will grow to just over $23 billion, as the team of underwriting banks have the right to sell as much as 15% more stock, known as the ‘green shoe’ in the industry.

Those familiar with the deal have mentioned that underwriters are targeting a first-day price gain of 10% to 20%. If GM shares rise more than 15%, taxpayers might be further infuriated since they will view it as another Wall Street giveaway, since smaller retail investors did not have much of an opportunity to buy in, despite being the ones who provided the GM and TARP bail-out money in the first place.

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