"General Motors IPO" Group Project

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"General Motors IPO" Group Project

  1. 1. Project for MBA 511General Motors CompanyInitial Public Offering in Nov. 2010Prepared by Mariya, Natalia, Omina and Rustam
  2. 2. GM Reorganisation Old GM New GM (before July 10, 2009) (after July 10, 2009) Vauxhall, Pontiac, Chevrolet, Cadillac, Vauxhall, Chevrolet, Cadillac, GMDaewoo (48.2%), Brands GMDaewoo (70.1%), GMC, GMC, Hummer, Holden, Holden, Buick, OpelBuick, Opel, Saturn, Saab 5,900 US Dealerships 5000 NGMCO - the United States Treasury (60%), the Canada Common shareholders, Development Investmentbondholders and secured Ownership Corporation (12%), Government creditors of Ontario, Old GM bondholders (10%), and UAW and CAW unions (17,5%) 47 US Plants 34 US$94.7 B Debt[1] US$17 B 91,000 US employees 68,500
  3. 3. New GM performance Debt reduction – from $172.8 bln (June 1, 2009 bankruptcy declaration) to $8.6 bln as of Sept. 30, 2010 As a result of restructuring GM: – discontinued unprofitable operations (sold off Saab, phased out Hummer, Pontiac, Saturn) – Honed product line and cut costs – Brought new management team on board Focused on profitable brands Chevrolet, Buick, GMC and Cadillac
  4. 4. Financial results in 2010 Vehicles sales growth in Nov. 2010 – 11.4% (on a year-to-year basis) Revenues growth by 2.5%-5% per quarter Net income (appl. to c/s) for 9 months of 2010– $4.2 billion Earnings per share – $2.62
  5. 5. Initial Public Offering –11/18/2010 Ordinary (voting) shares: – 478 mln x 33 US$ p/s = 15.77 bln US$ Convertible junior preferred shares: – 87 mln x 50 US$ p/s = 4.35 bln US$ Total volume – around 23.1 bln US$: – the largest IPO of all time Reduction of Government stake in GM from 61% to 33%
  6. 6. GM Common shares sales
  7. 7. Future growth potentialof new GM North American market (leader – 19% market share) – Projected growth of sales by 7.0% over 2010-2014 Growth in auto industry sales in the US: – 10,4 mln vehicles in 2009 – 11,4 mln in 2010 (projected by S&P) – 12,9 mln in 2011 (projected by S&P)
  8. 8. Future growth potentialof new GM (cont.) Growth in auto industry sales in BRIC countries (Brazil, Russia, India and China; leader – 13% market share): – Projected growth of sales by 13.9% over 2010-2014 New tech cars: – Chevrolet Volt recognized:  2011 Car of the Year by Motor Trend, Automobile magazines  2011 Green Car of the Year by Green Car Journal
  9. 9. New-tech cars –Chevy Volt
  10. 10. China – new battlefieldfor automakers The worlds biggest and fastest-growing auto market GM has 10 joint ventures and 2 wholly owned foreign enterprises GM – top-selling foreign brand in China – 1,8 mln vehicles sold in 2009 making up 13,4% of Chinese market share – In 2010, for the first time, GM is selling more vehicles in China than in the U.S.
  11. 11. China – new battlefieldfor automakers
  12. 12. Will GM sustain itspositive momentum? Cyclical nature of the auto industry Government ownership (33%) Outstanding pension fund debt (17.1 bln in 2009) Chapter 11 debt (more than 26 bln) Losses in European operations Focus on operating profit vs. market share
  13. 13. Our prediction for the endof 2010 Common shares - $33-36 Revenues growth by 2.5-3 p/a Net income (appl. to c/s) – $5.5 bln Earnings per share – $2.50-$2.80
  14. 14. Thank youfor your attention

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