General Motors, the US carmaker, is attempting to raise cash by selling majority control of its China joint venture and half of its India operations to Shanghai Automotive Industry Corporation (SAIC), its Chinese partner.
Under the terms of the deal, which could be announced within days, GM would sell a reported 1 per cent of its 50-50 China joint venture to SAIC, China’s biggest carmaker, ceding its controlling stake in its fastest-growing market.
The group has become the second-largest carmaker in China through its partnership with SAIC, which makes a wide range of GM-designed cars.
SAIC could pay up to 20 per cent of the joint venture’s value to take control. GM, which emerged from bankruptcy in July, would have the option of buying back the stake later at a premium.
GM is also reported to be putting its Indian operations into a separate joint venture with SAIC, selling about half of the operations to the Chinese group in the process.
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GM declined to comment on the deals but said: “During the past decade, our joint ventures have become some of the most successful and innovative in the industry.
“We are constantly holding discussions to ensure that both companies are improving and prepared for the future. Like with all our business discussions, these conversations are private.”
SAIC, which yesterday asked for its shares to be suspended on the Shanghai stock market pending an announcement, also declined to comment.
Analysts said that the potential infusion of cash may be used to prop up GM Daewoo.
The South Korean unit of GM needs money after incurring a loss of $2 billion last year.
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China’s relatively cash-rich carmakers have shown an increasing interest in overseas purchases, looking to pick up global brands and technology at bargain prices as the world’s car industry undergoes a big retrenchment.
In September it was reported that SAIC was considering buying a stake in Saab, the Swedish brand that GM has been attempting to sell.
In October GM sold Hummer to an investment partnership headed by Sichuan Tengzhong, of China.