By
updated 11/15/2010 3:47:35 PM ET 2010-11-15T20:47:35

Strong investor demand for General Motors stock may prompt the automaker to raise the target price range for Thursday's initial public offering, a person briefed on the matter said Monday.

GM earlier this month said the common stock would sell for $26 to $29 per share and preferred shares would go for $50 each. But demand for the shares is now causing the automaker to rethink the pricing, although no decision has been made, said the person, who asked not to be identified because they are not authorized to speak publicly on the issue.

Scott Sweet, senior managing partner of the research firm IPO Boutique, said investment bankers have told him the final price for the common shares will likely be $30 to $30.50 when it is announced on Wednesday after stock markets close.

  1. More must-see stories
    1. The Hartford Courant, Political
      Wild Wall St.

      Has the market volatility got you nervous? These cartoons may give you a little comic relief.

    2. Cyber-thieves create fake Kelley Blue Book site
    3. US says Reebok toning shoes don't really
    4. Can you live on $9 an hour? Play the game

It was unclear whether the price of the preferred stock, which would pay a 5.5- to 6-percent dividend and be converted to common shares in 2013, would change as well.

The Wall Street Journal, citing a person it did not identify, reported Monday that the new common share price range would probably be from $31 to $33.

GM spokesman Selim Bingol would not comment on any possible price increases, which could be announced in a filing with the U.S. Securities and Exchange Commission.

GM's owners, including the U.S. government, are selling 365 million common shares and the company plans to sell 60 million shares of preferred stock. At $30 per share, the common stock sale would be worth almost $11 billion, and the U.S. government would get almost $8 billion.

The price increase helps GM's owners raise more money. Besides the U.S. government, other owners are the Canadian and Ontario governments and a United Auto Workers health care trust fund, which also are selling shares in the IPO. Because of strong demand, banks underwriting the sale also are likely to exercise an option to sell 15 percent more shares, which could bring the sellers even more money.

U.S. taxpayers became GM's largest shareholder last year when the government put up $50 billion to get the automaker through bankruptcy protection. GM expects to have repaid $9.5 billion by the end of this year, and the government hopes to get the remaining $40 billion back through the IPO and several follow up sales.

Story: As GM tries to spin IPO, red flags still show up

Last week another person briefed on the sale said that orders for common stock were four times the number of shares, while preferred stock orders were double the number of shares.

Sweet said GM has to be careful not to price its offering so high that it exceeds limits placed on investors' orders.

The possibility of a price increase comes during a week that could be the biggest for IPOs since 2007, according to investment adviser Renaissance Capital LLC. The IPO market has improved steadily since August 2009. The sector had been almost frozen for nearly a year after massive losses on mortgage bonds upended global credit markets.

Sweet wrote in a note to investors that two other IPOs slated for this week also have more orders than shares, management consultant Booz Allen Hamilton Inc., and the massive broker-dealer LPL Investment Holdings Inc.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.40%
$30K home equity loan FICO 5.80%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.70%
13.70%
Cash Back Cards 17.66%
17.91%
Rewards Cards 17.05%
17.17%
Source: Bankrate.com