GM's return to the market sees shares surge past IPO price

SHARES in General Motors leapt in early trade yesterday after the American car-maker made a dramatic return to the market less than 18 months after it emerged from a government-funded bankruptcy.

They opened at $35 (21.88), above the initial public offering (IPO) price of $33, when dealings began on the New York and Toronto stock exchanges.

In the company's honour, the rev of a Camaro sports car engine on the New York trading floor replaced the traditional ringing of the bell.

The IPO for GM caps the first stage of a turnaround that has taken the 102-year-old car-maker from near-death in 2008 to unlikely Wall Street flotation favourite.

The Obama administration said the strong market debut for GM showed it made the right decision to restructure the car-maker with $50 billion in financing. Ron Bloom, the US Treasury official in charge of the investment, said: "This is a bit better than people had been projecting. As to a year ago, it's not even in the same ballpark."

The GM rescue left the Treasury with a 61 per cent stake and the car-maker with the embarrassing nickname "Government Motors". After the IPO, the US government sale could drop to 33 per cent.

The flotation values GM at about $63bn. Including an option that would allow underwriters to sell more shares, GM looks set to raise $23.1bn, eclipsing the record $22.1bn raised by Agricultural Bank of China in July.

At $33 a share, the partial sale represents a loss of about $9bn on taxpayers' original investment, assuming the extra shares go at the same price.

GM's management team said they recognised their job in transforming GM was not done. "We have to celebrate on the run here," said GM North America president Mark Reuss.