P&A Providers & Administrators
MenuMENU
SearchSEARCH

How GM IPO Won Over US Funds With Vows of Change

November 19, 2010
4 min to read



NEW YORK/DETROIT - One of the first signs General Motors Co. was driving toward a record-setting IPO with booming demand from U.S. investors came from an unlikely indicator: a sudden shortage of chocolate mousse at an investor meeting.


In one of the first appearances on a road show led by GM Chief Executive Dan Akerson that began just after the November elections, the automaker's underwriters arranged for potential investors to hear Akerson's pitch in New York City, reported Reuters.

Ad Loading...


GM had been expecting about 250 fund managers to turn up at Guastavino's, a former open air market cum architectural landmark beneath the 59th Street Bridge.


Instead, more than 500 crowded beneath the granite arches and vaulted tiled ceilings to hear from Akerson and Chief Financial Officer Chris Liddell.


Planners scrambled to find more lunches for the overflow crowd: salad, chicken, potatoes, iced tea and mousse.


A floor below, GM displayed five of its newer vehicles to catch investors' eyes.


Executives and bankers said that was when they began to realize they had a hit in the making with an IPO for a new GM less than a year-and-a-half after its landmark bankruptcy.

Ad Loading...


"The excitement was palpable. You could feel it," Akerson said on Thursday.


The strong demand that emerged from U.S. mutual fund investors and other fund managers in road show stops in Boston, Houston, Dallas, San Francisco and others turned the tide for the GM IPO, people involved in the process said.


Including a clause that would underwriters to sell more shares, GM's IPO will raise just over $23 billion, larger than the $22 billion raised by Agricultural Bank of China in July.


Between $3 billion and $4 billion in GM shares went to individual investors, a record IPO showing for Main Street.


From fear and loathing to greed

Ad Loading...


In September, with Akerson just weeks into the CEO job, underwriters argued that success for the deal would mean courting big overseas "cornerstone" investors, including sovereign wealth funds.


Bankers kicked off the first meetings with the likes of Singapore-based GIC and Temasek Holdings and investment authorities in Kuwait, Qatar and Dubai in October after the U.S Treasury signaled it had no objections, according to those involved in the process.


U.S. officials led by Ron Bloom, a former Lazard Freres banker, had been worried about the potential political backlash if a large share of GM stock was placed with foreign governments at the kind of discount - between 10 percent and 20 percent - that is typical for IPOs.


But when the domestic road show began in the first week of November, GM executives were surprised by how strongly U.S. mutual fund managers wanted in.


"We saw potentially all of the largest mutual funds over the past few weeks and I know - or I think I know - that virtually all of them put orders in," Liddell said.

Ad Loading...


The questions from U.S. investors, said GM's North American President Mark Reuss, repeatedly centered on one theme: "What's really changed - no kidding - in the company? That was a very consistent question throughout this."


Reuss, 47, GM's resident "car guy," hammered home a message about the automaker's devotion to quality and customer service after years of being criticized for ignoring both.


Liddell, 52, a New Zealand native and former Microsoft Corp CFO, delivered an equally reassuring message about the change in GM's once-lax financial management.


Never again, he said, would GM become "a $100 billion pension plan with a small company attached."


At Liddell's direction, GM began an effort days before the IPO road show aimed at of the biggest worries for potential investors: a $23 billion pension shortfall that went unfixed in the U.S. government bankruptcy.

Ad Loading...


Liddell was concerned that the estimated shortfall would rise at year end because the accounting effect of lower U.S. interest rates would overwhelm the better performance of its invested funds, one person familiar with his thinking said.


In late October, GM said it would devote $2 billion in stock and $4 billion in cash toward the U.S. pension shortfall after the IPO, leaving a gap of $13 billion the automaker told investors it would pay down over several years.


Liddell's goal was a "fortress balance sheet" that would protect GM from the inevitable ups and downs of a notoriously cyclical car business, he told investors.


One of his roadshow charts depicted the massive swings in U.S. car sales running back to 1913, including the fatal plunge for GM that began from the last peak in 2000.


"We know how we arrived here," Akerson said. "We know what went wrong and I believe we have learned a lot from that."


More Industry

Orange electric vehicle charging station.
Industry•by Lauren Lawrence•October 20, 2026

Charger Network Growth Slows

Despite a projected increase in public EV chargers in 2026, charging infrastructure remains a top concern for consumers as the gap between the most and least EV-friendly places remains substantial.

Read More →
Fan of $100 bills atop a white envelope
Industry•by Hannah Mitchell•October 13, 2026

Lenders, Consumers Take on More Auto Loan Risk

September records loosened credit access the most in over a decade as buyers took advantage of the conditions to afford trading, though loan applications fell.

Read More →
Red type R Honda civic parked on road.
Industry•by Lauren Lawrence•October 13, 2026

Next-Gen Hybrids in Sight

Dealerships can expect to see revamped hybrids from Honda next year as the company rolls out a new system and model lineup.

Read More →
Ad Loading...
Dodge ram emblem on orange vehicle exterior
Industry•by Hannah Mitchell•October 6, 2026

Gem State Stores Change Hands

A larger auto group founded in the industry’s early years sold two franchises to a neighbor group that's on a growth spurt.

Read More →
Graphic of model car driving on fake road.
Industry•by Lauren Lawrence•October 6, 2026

Charging In Motion

Honda has been researching wireless in-motion charging for electric vehicles since 2025, and new technology developments have put it a step closer to a final product.

Read More →
front grill of a Ford truck with blue Ford emblem
Industry•by Lauren Lawrence•September 30, 2026

Twin Cities Stores Sell

Minnesota-based Walser Automotive Group made what it called the most significant acquisition in its history with a three-rooftop deal in Minneapolis.

Read More →
Ad Loading...
Diesel engine on a production line in a factory
Industry•by Hannah Mitchell•September 29, 2026

U.S. Auto Sales Still Below Prepandemic Levels

Mobility Global industry observers don’t expect the market to return to the higher volumes that became routine before Covid but to stay well below its potential.

Read More →
Front of red tesla car.
Industry•by Lauren Lawrence•September 22, 2026

The Powertrain Shift

Electric-vehicle owners are backpedaling, according to new data, with product availability driving many to shift back to gas-powered engines.

Read More →
White BMW SUV driving on road.
Industry•by Hannah Mitchell•September 15, 2026

Achromatic Autos

The shades that dominate the U.S. car market don’t call attention to themselves, though grayscale may have plateaued after a 30-year upswing, research shows.

Read More →
Ad Loading...
Line of eclipse SUVs in parking lot.
Industry•by Lauren Lawrence•September 15, 2026

Used-Vehicle Affordability Worsens

Listing prices in August defied seasonal trends, rising above $27,000 for the second time this year.

Read More →