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Banks line up to handle GM stock

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Banks line up to handle GM stock

Automaker's initial public offering could raise $12 billion

David Welch / Bloomberg News

Morgan Stanley and JPMorgan Chase & Co. are expected to lead General Motors Co.'s initial public offering that may have the U.S. reducing its ownership as soon as this year.

At least five investment banks had competed to handle the offering, which may be worth as much as $12 billion, making it the second-largest in a decade. Morgan Stanley and JPMorgan will be responsible for writing the prospectus and promoting the shares to potential investors, according to two people who asked not to be identified because the decision isn't final.

Returning GM to public ownership will allow the U.S. to reduce its 61 percent stake and harvest returns on its $50 billion investment in the automaker. Choosing a lead bank in June means the automaker may hold an IPO in the fourth quarter, two people familiar with the matter have said.

GM CEO Ed Whitacre wants the company to have an automotive-lending unit before a fourth-quarter IPO, people familiar with the plan have said. GM hasn't had such a subsidiary since former CEO Rick Wagoner sold 51 percent of GMAC to private-equity firm Cerberus Capital Management LP in 2006.

Mark Paustenbach, a spokesman for the Treasury, declined to comment, citing a department statement Thursday that said federal securities laws preclude it from discussing the identity of potential underwriters before a registration statement is filed with the U.S. Securities and Exchange Commission. A GM spokeswoman, Renee Rashid-Merem, also declined to comment.

Chief Financial Officer Chris Liddell said May 17 the automaker's first-quarter net profit of $865 million was a good, useful step toward an initial offering. He said that the stock sale may not come until 2011 and that it wouldn't be necessary to control a financing unit before going public.

The sale may raise as much as $12 billion, an estimate by Independent International Investment Research Plc. showed.

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From The Detroit News: http://www.detnews.com/article/20100612/AUTO01/6120314/1148/auto01/Banks-line-up-to-handle-GM-stock#ixzz0qpsa4HSA

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