Chinese Plan to Buy Stake in GM
NEW YORK — In a sign of the changing fortunes of the world's top two economies, China's biggest automaker, SAIC Motor Corp., is negotiating to acquire a stake of about 1 percent in General Motors Co. worth about $500 million, a person familiar with the matter told The Wall Street Journal.
The U.S. auto maker also is prepared to sell more than $1 billion worth of shares to sovereign wealth funds in the Middle East and Asia. Combined, the sales would give foreign investors roughly 16 percent of the shares to be sold next week under an initial public offering of stock, and give them a stake of some 4 percent in the Detroit auto maker. GM declined to comment on the investment talks.
The issue of overseas investors buying GM shares in the company's IPO has been a sensitive one for the U.S. government, which plans to reduce its 61 percent stake in the automaker to about 35 percent through the IPO.
The investment in GM by government-owned SAIC would be the latest in string of deals giving Chinese companies stakes in big-name Western companies. In 2007, sovereign wealth fund China Investment Corp. took an initial 9.9 percent stake in securities firm Morgan Stanley. Pacific Century Motors recently took over GM's former steering unit, now called Nexteer, and Shougang Corp. bought Delphi Corp.'s brake unit.
The U.S. Treasury has to walk a fine line. Attracting foreign investors will be a key to pulling off a listing of this size. But the Treasury has also had to weigh the possible political outcry if investors abroad are allowed to acquire a significant stake in GM, after U.S. taxpayers spent $50 billion to carry the company through bankruptcy reorganization, people familiar with the matter have said. The Canadian government also helped bail out GM, which has operations in Ontario.
GM's IPO allocations likely will include three or four sovereign wealth funds, in addition to SAIC, according to a person familiar with the situation.
The investments would represent the latest in a wave of capital infusions into U.S. companies that first gained momentum in 2007, when the credit crisis prompted U.S. banks and other companies to search abroad for capital. China Investment followed up its 2007 investment in Morgan Stanley with a $1.2 billion investment in 2009, according to Dealogic. The same fund also paid $3 billion in 2007 for a 10 percent stake in Blackstone Group LP.
Sovereign wealth funds, in particular, are attractive investors to GM and its bankers because they tend to hold investments long-term, providing stability for the company.
GM executives are in the midst of a "road show" to pitch the IPO to investors. The tour won't stop in the Middle East or Asia, but GM has worked to court investors in both places. GM Chief Executive Officer Daniel Akerson last month went to the Middle East to speak to potential investors, and Vice Chairman Stephen Girsky recently went to Korea, say people familiar with the situation. A final decision on the SAIC stake could come within a few days.
SAIC and GM are partners in a Chinese joint venture, started in 1997, that makes Buick, Cadillac and Chevrolet vehicles. The partnership has earned GM hundreds of millions of dollars over the years and has made GM the largest foreign auto maker in China. GM and SAIC also have a joint venture in India.
More Industry

Kia Closes Out Summer With a Bang
Its U.S. subsidiary broke multiple records in August, in part due to a surge of demand for hybrids models.
Read More →
Indiana Dealership Changes Hands
A 30-year-old Ford dealership in Indiana has a new owner and will soon be undergoing renovations to meet manufacturer requirements.
Read More →
Texas Dealership No Longer in the Family
The Ford store, a longtime cornerstone of the Houston market, is now part of one of the fastest-growing U.S. auto groups.
Read More →
Genesis Grows California Presence
The Cardinale Automotive Group opened its third Genesis rooftop in the Golden State, Genesis of San Bruno, a stand-alone dealership serving the San Francisco Bay Area.
Read More →
August Auto Sales a Mixed Bag
An early forecast shows strong business despite consumer hurdles, and hybrids are a big piece of their affordability coping strategy.
Read More →
EV Market Humming Along
July sales show steady growth as the segment stabilizes from last year’s artificial surge following pullback of federal support.
Read More →
Auto Loan Delinquency Rates Stabilize
Auto loans are a main driver of nonmortgage consumer debt, but delinquency rates stabilized in the second quarter across all credit risk tiers.
Read More →
EV Sales Recover in Q2
The EV sales roller coaster continues as numbers show improvement, but industry experts predict a year-over-year third-quarter decline and fourth-quarter jump.
Read More →
The Cheapest Hybrids to Fuel
The powertrain is increasing in popularity, in no small part due to its fuel economy. A new report lists the most efficient hybrids on the market.
Read More →
Hybrids and SUVs Gaining Ground
The most recent Kelley Blue Book Brand Watch found that only two nonluxury brands increased in shopper consideration, buoyed by their hybrid and SUV offerings.
Read More →