Demand may propel new GM shares above $30 IPO, set for Thursday, draws heavy interest from institutional and foreign investors By David Shepardson and Christina Rogers The Detroit News Washington - General Motors Co. may sell more stock than initially planned, at a higher price than expected, because of strong investor demand, people briefed on the matter said Friday. The per share price could be $30 or more, exceeding the $26 to $29 range GM set less than two weeks ago, a sign that the market is bullish on the Detroit's automaker's return to the public markets. So far, demand is more than five times the 365 million common shares that are available, the sources said. That means many investors, including thousands of employees, retirees and dealers who have signed up to buy stock, are likely to get fewer shares than they are seeking. GM plans to sell an additional 60 million preferred shares, worth about $3 billion. The preferred shares also are oversubscribed but to a lesser extent than the common stock. With demand running high, GM's underwriters plan to exercise an option to sell as much as 15 percent more shares in the initial public offering, bringing the total to 419.8 million common shares and 69 million preferred shares. The IPO, now valued at $13.6 billion, could grow to as much as $15.6 billion if the additional shares are sold. That would make GM's IPO the second largest in history, behind Visa's $19.7 billion offering in 2008. GM is expected to set the final price on Wednesday , with shares going on sale the following day. GM's sale is attracting some high-profile investors. China's biggest auto maker, SAIC Motor Corp., is expected to finalize an agreement to buy a small stake in GM next week, according to people briefed on the matter. The roughly 1 percent stake would be worth $500 million, these people said. Several sovereign wealth funds, which are state-owned investment funds, are expected to buy stakes in GM worth up to $2 billion. Kuwait's sovereign wealth fund said this week it is considering buying a stake. Penske encouraged Roger Penske, chairman of Penske Automotive Group, told The Detroit News on Friday that he plans to invest in GM's IPO. He's encouraged by the comeback of Detroit's Big Three and described GM as a good investment. 'I have been contacted by a broker and I expect to invest in a number of shares,' Penske said, adding that the specific number will be determined once the brokerage house he is working with knows how many shares it has been allotted by GM's underwriting banks. GM executives have been on the road all week selling the stock and will continue accepting orders from investors through next week. Matt Therian, a research analyst at Renaissance Capital in Greenwich, Conn., which tracks IPOs, said it isn't unusual for IPO pricing to end up higher than initially planned when a company sets a price range before heading out to generate interest from investors. About 40 percent to 60 percent end up in the target range, but the rest are eventually priced higher or lower, he added. Analysts have said GM's $26 to $29 per share price range is low, compared to estimates of the company's market value. 'The $29 just looks low to me,' said David Whiston, an equity analyst with Morningstar, who in September valued GM's stock after a split at about $44 a share. Treasury may shrink loss GM emerged from bankruptcy with 500 million shares, increasing to 1.5 billion after a three-way split helped reduce the per-share price and make it more attractive to investors. The U.S. Treasury bailed out a failing GM last year by giving the automaker $49.5 billion in exchange for a 61 percent stake in the company. The Treasury plans to sell 263.5 million of the 912 million shares it owns in the first public sale, which would have to fetch about $43.67 each for the government to break even. The Treasury could lose as much as $5.4 billion on the first sale at the current pricing, but that loss could shrink to below $3.6 billion if the shares sell at $30 or more. 'If there is more demand for it, it makes sense to take it up a couple dollars more,' Whiston said. Kirk Ludtke, a senior vice president with securities broker CRT Capital Group in Stamford, Conn., said the conservative pricing is understandable given the uncertainty still hovering over the financial markets. 'When it's that uncertain, it pays off to start off with something that will get people's attention,' he said. GM's marketability got a boost this week when the carmaker reported a $2 billion net profit in the third quarter, nearly matching its profit for the first half of the year. The strong early demand for GM shares could bode well for subsequent stock sales, helping to fetch a higher share price when the U.S. Treasury seeks to sell of the rest of its GM stake over the next few years. Treasury officials and GM senior executives are barred from selling shares for six months after the offering. 