General Motors Co. is on the road to the biggest-ever initial public stock offering.
The Detroit automaker raised $15.8 billion late Wednesday and is expected to sell additional shares to bring the total to as much as $23.1 billion Thursday when the stock goes public in its highly anticipated debut.
The company decided late Wednesday to price the shares at $33.
The total amount raised would surpass the previous IPO record of $22.1 billion set by a Chinese bank this year, a reflection of the automaker's improbable turnaround and investors' increasing thirst in recent days to cash in on a red-hot deal.
"This was a feeding frenzy," said David Menlow, president of research firm IPOfinancial.com.
The biggest beneficiary of the higher price is the U.S. government, which could reap about $13.6 billion, far more than it expected a few days ago.
Combined with the $9.5 billion that GM has repaid to the Treasury Department or soon will, taxpayers could recoup about $23 billion of the nearly $50 billion the federal government forked over to rescue GM last year.
The offering would reduce the government's ownership stake to as low as 33% from 61%. President Obama called the deal a "major milestone in the turnaround of not just an iconic company but the entire American auto industry."
"Supporting the American auto industry required tough decisions and shared sacrifices, but it helped save jobs, rescue an industry at the heart of America's manufacturing sector and make it more competitive for the future," Obama said in prepared remarks.
Taxpayers, though, will still be waiting awhile to recoup the rest of the money spent to bail out the company. Despite the big demand and the higher price, shares would have to hit nearly $53 a share before the debt could be fully repaid.
The stock still faces two big tests when trading begins Thursday morning.
The first is whether the opening price will exceed the $33 value. That is likely, analysts said, because investors who couldn't get into the IPO are lining up to buy at the start of trading. Traders at the New York Stock
Exchange will set the opening price Thursday morning after sifting through the expected avalanche of orders.
The second test will be whether GM shares finish the day above the opening price, a prospect that is certainly possible but far from guaranteed.
Hot initial offerings sometimes fizzle late in the day as investors who bought early in the day sense that the stock price has run its course and flip the stock.
A disappointing close could attach a stigma to the GM deal, as could any hitch in the car company's earnings or stock price in coming months, analysts say.
"The risk is in the expectations this sets," said Jeremy Anwyl, chief executive of automotive research firm Edmunds.com. "If the company underperforms, that will make future offerings much more challenging."
Still, the scramble among investors this week for GM shares was a welcome sight throughout the automotive world, which views the deal as a referendum on the confidence level of investors in the recovering industry.
"It is excellent news for GM and for the auto industry," said Jonathan Browning, chief executive of Volkswagen of America.
GM's turnaround, enabled by the taxpayer bailout, has been impressive, considering that it emerged from a government-sponsored bankruptcy proceeding only last year. The automaker reported its third consecutive profitable quarter last week and is on track to have its first full-year profit since 2004.
Bolstered by better sales and cost-cutting measures, GM earned $2 billion in the third quarter. Revenue rose to $34.1 billion, up 27% from the same quarter last year, which included nine days when the company was in bankruptcy.
From 2005 through 2009, the automaker had about $88 billion in losses.
GM's turnaround ensures its survival, which "is good for the industry, particularly in terms of the supply base," Browning said. "If you were to remove a player like that, it would have awful consequences."
The $33 share price was the high point of a range the company boosted just two days earlier from an initial level of $26 to $29. GM also increased the number of common shares being sold to as many as 549.7 million, plus up to 100 million preferred shares.
The $23.1 billion total would surpass not only the record set by the Agricultural Bank of China but also easily break the $19.7 billion record for a U.S. company, set by Visa Inc. in March 2008. However, Visa's deal was all common stock, leaving it as the largest by that measure.