GM's Chinese partner to buy stake if regulators back deeper alliance

Detroit/New York: China's SAIC Motor company has agreed to take a stake in General Motors if Chinese regulators approve a deal to deepen an existing alliance between the two car manufacturers.

The potential investment from SAIC is part of an increase in investor interest in GM that is expected to push the price of its shares to $29 (Dh106.50) or above in the US company's initial public offering, a sources said.

SAIC

Another source said SAIC, GM's partner in China, would take a stake of around one per cent in the car manufacturing company, which is majority owned by the US Treasury after a bail-out last year.

An investment of just over $500 million (Dh1,836.32 million) would represent about one per cent of the common stock in GM if the IPO prices at the high end of the proposed range this week.

Apart from further cementing their tie-up in China, SAIC was also taking part in the deal to gain access to GM's sales networks outside China, including in Europe. SAIC Chairman Hu Maoyuan previously said that the carmaker would revive production at its UK plant and make MG cars available in Britain and the rest of the European Union in 2011 as part of its move to revive the acquired British marque.

"That would be a great help for the Chinese car manufacturer, which had aimed to start selling its MG cars in Europe next year," said another industry source.

SAIC's shares traded in Shanghai rose by 1.1 per cent to 18.2 yuan, outperforming a 0.5 per cent fall in the benchmark index.

Chinese government

China's government would have to approve the SAIC investment before Wednesday for it to go forward as part of GM's IPO, however. GM had no comment, while SAIC representatives declined to comment. And China's commerce ministry could not be reached.