IPO VIEW-GM considered, rejected HK listing — sources

* GM mulled HK listing to highlight Asia focus–sources

* Plan scrapped on IPO timing, complex rules–sources

* Trading, investor gains from HK listing unclear–sources

* Canada’s GM bailout a factor in Toronto listing–sources

By Clare Baldwin, Soyoung Kim and Kennix Chim

NEW YORK/HONG KONG, Aug 20 (BestGrowthStock) – General Motors Co
[GM.UL] considered an Asian exchange for its historic return to
the public markets, but ruled it out because it would have
delayed the IPO, people familiar with the matter said.

GM, which filed plans for a dual listing in New York and
Toronto this week, as recently as several weeks ago was also
considering listing in Hong Kong to highlight its growing focus
on China — now the world’s largest car market — and to
attract the region’s growing pool of investors, the sources
said.

That plan was ultimately scrapped because a Hong Kong
listing would have pushed GM’s IPO beyond its targeted debut
between late October and the U.S. Thanksgiving holiday, sources
said, asking not to be named because the preparations for the
IPO are not public.

It was also unclear what the U.S. automaker would gain in
terms of investors or trading liquidity and listing on multiple
exchanges would have added cost and complexity to GM’s already
complicated IPO, two of the sources said.

“I don’t think signaling goodwill towards Asia is likely to
be a significant enough argument for all the cost and
complexity. I don’t want to overstate the cost and complexity
but it’s not insignificant,” one of the sources said.

The Hong Kong stock exchange requires three years of
profitability or a large market capitalization and revenue in
order to list.

GM, which lost $88 billion from 2005 through the first
quarter of 2009, is a former blue-chip stock, but it only
emerged from bankruptcy in July 2009. It has posted profits for
the past two quarters.

GM, now majority owned by the U.S. Treasury as a result of
its taxpayer-funded bailout, is keen to distance itself from
government ownership and the label “Government Motors,” and to
build momentum in its turnaround.

The Obama administration, facing the mid-term elections in
November, also wants to be able to cast its GM bailout as a
financial success in the face of public skepticism and
Republican political opposition, and a struggling economy.

“It would have taken too long to clear all the regulatory
issues in Hong Kong,” one of the sources said.

GM’s Toronto listing is a direct result of the role Canada
played in helping bail out the U.S. automaker, the sources
said, adding that Toronto would not make a big difference as
far as trading liquidity was concerned.

Canada and Ontario pitched in $9.5 billion alongside the
United States’s $50 billion in GM’s government-sponsored
bailout. GM emerged from bankruptcy protection 61 percent owned
by the U.S. government and 11.7 percent by the Canadian and
Ontario governments.

“It’s a big thank you to the Canadian government for their
role in supporting GM,” one source said.

GM spokeswoman Renee Rashid-Merem declined to comment.

STRATEGY VS. POLITICS

While the decision not to list shares in Hong Kong may have
no impact on who can or cannot invest in the company, it could
make it harder to woo some Asian investors, one person familiar
with the situation said.

GM is looking to leverage its IPO to further establish its
presence in Asia and is considering using “cornerstone”
investors — investors who commit to buy and hold major stakes
in an IPO, and who help attract more investors to large deals
by showing they support it — primarily in Asia, several people
have told Reuters.

GM’s sales in China, now the world’s biggest auto market,
surged 48.5 percent in the first half to 1.21 million vehicles,
exceeding the company’s U.S. sales for the first time.

Over the same period, GM’s U.S. sales rose 13 percent to
1.08 million vehicles, while sales in Canada dropped 8 percent
to 123,488 vehicles.

Underscoring China’s growing clout in the global auto
industry, industry-wide auto sales in China totaled 13.6
million vehicles in 2009, far ahead of U.S. industry sales at
10.4 million vehicles and Canadian auto sales at 1.5 million
vehicles.

“We view the Chinese market, the fastest-growing global
market by volume of vehicles sold, as important to our global
growth strategy,” GM said in a filing with the U.S. Securities
and Exchange Commission on Wednesday.

In rankings based on domestic equity market capitalization,
Toronto is last among the three exchanges that GM considered.

The New York Stock Exchange, run by NYSE Euronext (NYX.N: ),
is the top-ranked exchange globally, according to the World
Federation of Exchanges. At the end of June, the NYSE had U.S.
listings whose equity market capitalization on a domestic basis
totaled $11.8 trillion.

The Hong Kong stock exchange, run by Hong Kong Exchanges
and Clearing Ltd (0388.HK: ), was ranked fifth with $2.2 trillion
and the Toronto Stock Exchange, run by TMX Group Inc (X.TO: ),
was eighth with $1.64 trillion.

“There’s no logic behind listing in Toronto other than the
political factors — none,” one source said.
(Reporting by Clare Baldwin and Soyoung Kim in New York and
Kennix Chim in Hong Kong; additional reporting by Philipp
Halstrick in Frankfurt, Jonathan Spicer in New York, Alison
Leung in Hong Kong, Fang Yan in Beijing, Jennifer Kwan in
Toronto and John Crawley in Washington; editing by Andre
Grenon)

IPO VIEW-GM considered, rejected HK listing — sources