GM shares jump after record public offering
GM has returned to the market after almost a year and a halfShares in General Motors (GM) have risen 7% on the first day of trading following the carmaker's record public share offering.
Shares rose as high as $35.99 in early trade in New York, having been priced at $33 by the company.
GM raised $20.1bn (£12.6bn) through its offering, making it the largest share sale in the US to date.
President Obama called the sale a "major milestone" for both the company and the US car industry.
The amount raised could rise to a world record $23.1bn if underwriters exercise an option to sell more shares.
Surprisingly strong investor demand had allowed the carmaker to lift the price of the shares on offer to $33 from the $26 it had initially hoped for.
GM is returning to the market after a $50bn government bail-out.
Different ballpark
The day's trading began on Wall Street when GM chief executive Dan Akerson rang the opening bell on the New York Stock Exchange.
Analysis
This is a very bright start.
The share offering is more ambitious than anyone expected, and the demand for stock seems overwhelming.
Not bad for a company that almost went bankrupt 18 months ago.
But there's still a long way to go if the taxpayers are to get all their money back. The bailout cost them $50bn.
It's thought the government will have to sell its remaining stock at around $50 a share for several years to recoup its investment.
But the bailout was never only about GM. The Obama administration argued that the entire American car industry, with all its associated businesses, was at stake.
So far, the evidence suggests that something is working.
A general revival does seem to be under way, at least in terms of the profitability and competitiveness of the companies involved.
But the cost has been huge: tens of thousands of workers were laid off, plants closed, familiar brands ditched and auto dealers told to look for other work.
And the bailout itself remains hugely controversial, with the administration's critics still seeing it as an unwarranted intrusion of big government into the free market.
It's clearly in the interests of both GM and the White House for the nickname "Government Motors" to become a thing of the past.
"There's a lot of work to do, but today is the beginning of the new company," said Mark Reuss, GM's North American president.
Government officials said the company's strong market debut showed they had made the right choice in rescuing the carmaker.
"This is a bit better than people had been projecting. As to a year ago, it's not even in the same ballpark," Ron Bloom, the Treasury official in charge of the GM investment told Reuters.
"A year ago, people said, 'You have no exit, you have no strategy. This company is not fixed.'"
Back in profit
The carmaker has raised $20.1bn from the sale of the shares. However, an over-allotment option, which will be settled over the next 30 days, would add $3bn to that figure, taking GM beyond the $22.1bn raised by the Agricultural Bank of China's market launch.
The share sale, known as an initial public offering (IPO), will allow the US government reduce its current 61% stake in the company to as low as 33%.
GM returned to profit this year for the first time since 2004. The company made $5bn during the first nine months of this year.
Scott Painter from the US car comparison site Truecar.com believes the IPO is a sign of how well the economic recovery is going.
"I think GM having a strong IPO and pricing it at the high end of the range certainly speaks well of America and confidence in America, and GM is a really good indicator of everything that we've been through over the last couple of years and how the recovery is working out," he said.
