NEW YORK (By Clare Baldwin and Soyoung Kim) - NEW YORK (Reuters) -General Motors Co shares gained as much as 9 percent on Thursday as investors bet that the top U.S. automaker can make a lasting recovery after repaying a big chunk of last year's government bailout with funds raised in a landmark initial public offering.
(Scroll down for a list 10 other hugely hyped IPOs)
GM shares began trading on the New York and Toronto stock exchanges with the rev of a Camaro engine on the floor of the New York Stock Exchange taking the place of the traditional ringing of the bell. Composite share volume surpassed 100 million in the first 20 minutes.
The start of trading in GM shares represents one of the final steps in a blockbuster initial public offering negotiated by the Obama administration that raised $20.1 billion after pricing its common and preferred shares.
The IPO caps the first stage of a turnaround that has taken the 102-year-old automaker from near-death in 2008, via a 2009 bailout, to unlikely Wall Street flotation favorite in 2010.
A fund manager who invests in auto and other shares said he remained ambivalent about GM's merits at these prices. "Going forward, I do think that when they raised the IPO price, that I think probably a lot of gains that I would have anticipated were already priced in, that the government got the profit," said Bernie McGinn, chief investment officer at McGinn Investment Management in Alexandria, Virginia.
"I wouldn't expect a lot on the upside, I wouldn't expect a lot on the downside for GM," McGinn said.
Obama administration officials said the strong market debut for GM showed they made the right choice in restructuring the auto maker with $50 billion in financing.
"This is a bit better than people had been projecting. As to a year ago. it's not even in the same ballpark," Ron Bloom, the U.S. Treasury official in charge of the GM investment told Reuters Insider. "A year ago, people said 'you have no exit, you have no strategy. This company is not fixed.'"
The GM rescue left the Treasury with a 61 percent stake and the automaker with the embarrassing nickname "Government Motors." After the IPO, the U.S. government sale could drop to 33 percent.
The IPO values GM at about $63 billion. Including a yet-to-be exercised option that allows underwriters to sell more shares depending on demand, GM looks set to raise $23.1 billion, eclipsing the record $22.1 billion raised by Agricultural Bank of China in July.
Check out 10 other hugely hyped IPOs and how their stock is currently performing:
(Additional reporting by David Bailey in DETROIT, Donny Kwok in HONG KONG, Aiko Hayashi in TOKYO, Dominic Lau in LONDON and Josie Cox in FRANKFURT; Writing by Kevin Krolicki; Editing by Anshuman Daga, Andrew Callus and Matthew Lewis)
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