During the next six months, there is a "lock-up agreement" between GM shareholders and the underwriters of the company's initial public offering, Dan Simkowitz, Global Chairman of Capital Markets at Morgan Stanley, told CNBC on Thursday.
A lock-up agreementis a binding contract between the underwriters and insiders of a company prohibiting these individuals from selling any shares of stock for a specified period of time.
"Typically in an IPO, you would not see secondaries within the first six months. After the six months, it's really a decision between the company, the selling shareholders, underwriters and the market about whether it would be appropriate," Simkowitz said.
"Many parts of this transactionare not standard, but if you look at where the stock has moved to in the aftermarket, if you look at where the stock was allocated, if you look at the momentum we built, we really tried to make this as standard of an offering as possible," he said, adding, "except for the size, which obviously is very, very large."
The run up to GM's IPO on Thursday was multi-subscripted with underwrites able to keep that over-subscription at a high level, as they made their last two moves—increasing the price from $32 to $33 and the overall size of the offering, Simkowitz said.
"We were able to keep relatively high subscription levels throughout, which allowed the stable aftermarket today," he concluded.