As Lyft Inc cruises toward an initial public offering in March, one of the big winners will be General Motors, whose stake in the ride-hailing firm could be worth about $1.27 billion.
The automaker is not talking about its strategies for that investment, and investors polled by Reuters, owning a collective 35.7 million shares, do not have a consensus yet.
Some consider General Motors should hold on to it for strategic factors, while others want the money returned to shareholders through buybacks or a special dividend.
“Unless GM can leverage its investment in Lyft to accelerate its own robo-taxi ambitions with Cruise, we believe it would be appropriate to cash out its stake to repurchase its own under-valued shares,” stated Michael Razewski, a partner with Douglas C. Lane & Associates, that owned about 2.6 million GM shares at the end of the last year.
Cruise Automation is the self-driving car unit of General Motors.
Lyft on Monday introduced the investor “roadshow” for the March 29 IPO, and it stated it to sell Class A shares at $62 to $68 per share.
GM owns over 18.6 million Class A shares, as per the Lyft filing, indicating its investment at the outset could be worth $1.16 billion to $1.27 billion. The automaker invested $500 million in Lyft in January 2016.
With a 180-day lock-up period during which the automaker cannot sell and the expected April IPO of bigger competitor Uber Technologies further showing interest in the ride-hailing sector, the value could subsequently increase.
GM spokesman Tom Henderson stated the automaker is happy with its Lyft stake but refused to discuss future plans for the shares. Lyft spokeswoman Alexandra LaManna had nothing to say.
Several shareholders prefer GM selling the stake and use the proceeds to buy the shares again or pay a special dividend.