GM’s Stock Offering May Hand Bankers Lowest Fees Since 1999
WASHINGTON - Wall Street bankers may be pushed to charge the lowest fees in at least a decade to arrange the Treasury’s sale of General Motors Co. in what could be the second-largest initial public offering in U.S. history, Bloomberg reported.
Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are vying to lead the automaker’s share sale, which may raise as much as $12 billion, an estimate by Independent International Investment Research plc showed.
The U.S. government may seek underwriting fees of as low as 2 percent, according to finance professors at Cornell University and Georgetown University. That’s less than any U.S. IPO over $5 billion since 1999, Bloomberg data show.
The Treasury, which owns a 61 percent stake in GM, will pressure the banks to accept fees that may be less than half the 5.5 percent average for all IPOs in the past decade after spending $150 billion in taxpayer money on the same financial firms during the credit crisis, the professors said.
The underwriters would make as much as $360 million in an initial offering of GM based on the average 3 percent fee for past deals over $5 billion, data compiled by Bloomberg show.
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