GM mulls ‘cornerstone’ sales in IPO

By Reuters
Posted Aug. 16, 2010 at 4:59 p.m.

General Motors Co is considering selling a chunk of the carmaker’s stock to institutions who would commit to buy and hold major stakes as the company prepares for its initial public offering, people familiar with the discussions said on Monday.

GM is mulling a plan under which sovereign wealth funds or pension funds would serve as “cornerstone investors,” a technique often used for large initial public offerings to show that key investors are supporting the deal, four people said.

“It’s on the table and would be part of the normal course of the IPO,” one of the sources said, asking not to be named because the preparations for the IPO are private.

But getting cornerstone investors may attract political criticism if foreign investors or union-linked funds are seen as getting a sweetheart deal.

Direct discussions with potential investors would begin after GM files its initial prospectus with the U.S. Securities and Exchange Commission, expected on Tuesday, the sources said.

 

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