SAIC Motor Corp is close to making a decision on whether to buy a stake in its long-time partner General Motors as the latter goes public, sources with knowledge of the matter have said on Wednesday.
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SAIC, which operates manufacturing ventures with GM, has been exploring the prospect of taking a stake upon Detroit automaker’s over US$13bn share sale. SAIC chairman Hu Maoyuan had admitted publicly that he would not rule out such a possibility.
“SAIC is the most successful partnership in the Chinese auto industry. But this is a strategic decision for SAIC. At this point, it’s fair to say that SAIC is close to the final call,” a source told Reuters.
GM, which emerged from bankruptcy in July 2009, is likely to sell a combined $1.5 billion to $2 billion stake to four or five sovereign wealth funds, the news agency’s sources said.
The IPO has been closely watched due to its scale and the involvement of the USgovernment, which is looking to the landmark stock offering to reduce its nearly 61% stake in the automaker.
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By GlobalDataGM and SAIC executives in China declined to comment on issues related to the IPO.
China is now GM’s biggest market, where it sells locally-made Chevrolet, Buick and Cadillac models. Wuling-brand mini vans and pick-up trucks manufactured at its JV with SAIC give GM access to the country’s fast-expanding mini vehicle market.
“They are good partners and funding is never an issue for cash-rich SAIC. It seems to me that an equity tie is highly likely,” Sheng Ye, associate research director at industry consultancy Ipsos’ Greater China region, told Reuters.
The pair announced a new MoU today that includes the development of ‘new energy’ vehicles for China
