Bloomberg reports that GM has already pulled off one of the ballsiest IPO moves ever, by asking banks bidding to underwrite its IPO to use fees to subsidize the purchase of GM vehicles by its employees. According to the report, a GM document sent to bidding banks solicited
ideas as to how we can use the IPO to reposition GM and its vehicles within the investment community including your firm’s willingness to reinvest any portion of any underwriting fees into the purchase of GM vehicles for your employees and/or company use.
Winning bidders JP Morgan Chase and Morgan Stanley refuse to comment on whether or not they agreed to this condition, but considering their fees of .75 percent is a quarter of what they would normally charge, the fact that GM even asked shows a lot of chutzpah. Says Joe Phillippi of Autotrends
That’s hardball. After beating them down on fees they want another pound of flesh. It does sound a little unusual.
The details of GM’s IPO should surface next month, when GM files its prospectus ahead of a planned November IPO. If The General snagged a fleet deal from its underwriters, the Treasury would have to approve the deal… and it has already reportedly nixed an arrangement that would have paid GM’s IPO underwriters in company equity. But then, the two underwriting firms have already committed a billion dollars in credit to The General, an amount that is likely to far exceed their fees for the IPO. In short, government-rescued banks seem more than happy to bend over backwards for the government-owned automaker. Is anyone surprised GM thought it might get a few extra sales out of the deal too?