On Friday a story was circulating that the size of GM's IPO would be in the $8-$10B range, roughly half the size speculated earlier.
I still think the IPO is timed about a year too early; extra time is needed to reestablish credibility. But I also think reducing the size is a good move.
A larger offering would increase the liquidity for new GM shareholders -- the UAW and the US Treasury, primarily. The flip side is that it would push down the per share valuation. This could raise questions about the gap between the $70B valuation the Treasury needs to "break even" and whatever the market valuation turns out to be. The smaller the offering, the greater the chance that demand will push up the share price to a nice valuation.
The Treasury needs a good valuation more than it needs cash. After all, what is a few billion when you are swimming in trillions in debt?
The UAW might have a different view. It needs to convert shares into funding for its VEBA trust, so the need for liquidity is more urgent.
Holding shares also allows the Treasury and UAW greater benefit from any stock appreciation, post IPO. Because the timing is so close to GM's bankruptcy, there is presumably still some value upside. (Look at Ford's stock over the past year.)
There is risk. If GM can't sustain its current sales momentum, share value post-IPO will plummet.
Still, all things considered, a smaller offering is a better offering.
Bill covered more on this over on AutoObserver.