Kuwait City: The Kuwait Investment Authority, Kuwait's sovereign wealth fund, may participate in General Motors Co's planned initial public offering if it is feasible for the fund, its managing director said Saturday.
"Last week, they announced the price range, which is the valuation range," Bader Al Saad told reporters in Kuwait City.
"We have to review if it is feasible for us. If it is feasible for us we will look into it. If it is something cheap, we are interested of course," Al Saad said.
GM on Wednesday disclosed estimated terms for its planned IPO, in which some $15 billion (Dh55.05 billion) of stock could be sold and the US government would reduce its stake to below 50 per cent.
Current owners of the company, including the US Treasury Department, plan to offer at least 365 million shares at a projected $26 to $29 each, according to a filing with the Securities and Exchange Commission. The final price, which should be set around on next Wednesday, could be higher or lower than this range, depending on market demand.
High cycle
In addition to the common stock being sold by the current owners, GM plans to sell 60 million shares of preferred stock for an estimated $50 each.
General Motors is currently approaching several sovereign wealth funds in the Middle East for its planned IPO of the "new GM" this month, Gulf News has learnt from people who are involved in the talks. Among them are Saudi Arabia's Kingdom Holding, Abu Dhabi's Mubadala as well as Qatar Holding.
Besides that, GM is also talking to Singapore's Tem-asek Holdings, the investment arm of the Singapore government. There are also talks that GM's Chinese partner Shanghai Automotive Industry Corp might buy a larger stake.
GM's Chief Financial Officer Chris Liddell, pitching investors on its initial public offering, said on Thursday earnings before interest and taxes may rise to as much as $19 billion in what it called a "high cycle" for the global automobile industry.
GM, planning to raise as much as $10.6 billion in the IPO, has reduced its hourly labour costs and will be able to produce as much as $16 billion in free cash flow with profit margins as wide as 10 per cent, Chief Financial Officer Chris Liddell said.
The old General Motors Corp was restructured in a US-backed bankruptcy last year, allowing the Detroit-based automaker to earn as much as $4.2 billion through three quarters this year.
"This will give us the type of fortress balance sheet that we believe is appropriate for a company in a high fixed-cost, cyclical industry," Liddell said.
—With inputs from Arno Maierbrugger, Deputy Business Editor
