China Eyeing A Share Of GM

Since I’ve been writing for TTAC, I predicted that Chinese interests will eventually go for GM, if and when price and time are right. GM already sells more cars in China than back home. GM expects that huge business to grow by 10-15 percent next year. It stands to reason that China wants on (the) board. There has been talk about limiting the share of “foreign investors” in the GM IPO. “Foreign investors” of course are Chinese, and the true number of foreign investors interested in the GM IPO probably comes down to one: China’s SAIC, GM’s Chinese joint venture partner for 13 years now. And now it’s official.

SAIC “has reached out to General Motors Co GM.UL to explore the prospect of taking a stake in the automaker when it goes public this fall,” says Reuters, citing (count ‘em) a total of four people with knowledge of the matter.

Not to spook politicians and public too much, SAIC has expressed an interest in acquiring a “single digit” share in GM, said one of Reuter’s informants.

Because the SAIC contact with GM remains private and preparations for GM’s IPO are covered by strict U.S. securities regulations regarding disclosure, none of the sources agreed to be named.

Two weeks ago, Ed wrote: “Expect Treasury to publicize any limitations on foreign investment in GM’s IPO sometime “within the next couple of weeks.” And no matter how the bureaucrats rule, it won’t be great for taxholders. After all, foreign investors (particularly in China) have the motivation and means to invest heavily in GM, which would help boost the IPO price.”

Yesterday, that ruling came down. In an online posting made late Friday, Treasury said that the IPO would be open to a wide range of investors including overseas funds and U.S. retail buyers.

According to Reuters, “GM and its advisers also are making appointments to meet with sovereign wealth funds over the next few weeks to sound out their interest in committing to buy and hold major stakes as so-called “cornerstone investors.” One of the biggest and flushest sovereign wealth funds sits in China and belongs to the Chinese government. SAIC can get a “single digit” share, but if the Chinese government buys a “major stake,” soon we’ll be talking about real money.

Even with “foreign parties” interested in snapping up GM shares, don’t count on getting your tax money back soon. GM is determined to pay back taxpayers as quickly as possible, but the process could take “several years,” GM CEO Dan Akerson said on Thursday.