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Wed 17 Nov 2010 10:32 AM

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Kuwait state fund eyes stake in General Motors

Detroit-based carmaker to IPO on Wednesday, may raise $15.8bn as investor demand surges

Kuwait state fund eyes stake in General Motors
General Motors headquarters in Detroit, US. The carmaker is scheduled to issue an IPO later today

Kuwait Investment Authority, the Gulf country's sovereign wealth fund, may buy a stake in General Motors (GM) when the troubled car maker issues its initial public offering later today.

The Gulf state may take a stake of one percent or less, Bloomberg said, citing a person familiar with the deal.

The CEO of the investment fund, Bader al Saad, told reporters earlier this month that he would consider taking part in the IPO if it was feasible.

"Now, the price range has been set. Last week, they announced the price range, which is the valuation range," he said.

General Motors Co’s IPO may raise $15.8bn after the US Treasury and United Auto Workers’ retiree healthcare trust increased the shares they are selling, two people familiar with the IPO said.

The IPO may expand by 31 percent to 478 million shares, in response to surging demand from investors, who had put in orders worth $70bn for GM’s common shares by late Tuesday.

An overallotment may increase the total offering to 550 million or $18.2bn, said a person familiar with the plan. The Detroit-based automaker boosted its offering range yesterday to $32 to $33 a share, from $26 to $29.

The initial sale will bring Chief Executive Officer Dan Akerson closer to his goal of returning the $49.5bn GM received in a taxpayer bailout last year.

The Treasury, which is taking a loss on its portion of the sale, will break even only if the shares climb at least 60 percent, Bloomberg data shows.

The IPO would be the second-largest in US history, after Visa Inc’s $19.7bn sale in March 2008, Bloomberg data shows.

Including the preferred stock offering of $4bn, increased yesterday from $3bn, GM may raise $22.2bn for shareholders and its own coffers 16 months after the automaker emerged from bankruptcy.

General Motors Corp. filed for Chapter 11 bankruptcy protection on June 1, 2009, after the failure of New York-based Lehman Brothers Holdings in September 2008 froze credit markets and helped cause the longest recession since the Great Depression.

GM’s common shares will be listed on the New York Stock Exchange under the ticker GM and on the Toronto Stock Exchange under the ticker GMM, the SEC filing showed.

* With reporting from agencies