Marcio Alaor BMG is the CEO of the South American bank: Banco BMG. He teaches the importance of taking a company public in order to raise large amounts of capital quickly. Launching an IPO (Initial Public Offering) enables the company to grow enough to become a dominating force in that company’s industry. As an example, he points out that General Motors (GM) went public with an IPO a hundred years ago, in 1915. The capital raised supported the growth of GM from just another fledgling car company, which had been struggling to follow in Ford Motor Company’s tire treads, to the number one automaker in the world. GM’s assets are valued at more than $54 billion USD.
By contrast, Henry Ford fought his own people to keep his company, the first one and at one time the most successful, from ever going public. Consequently, Ford lagged behind and did not launch an IPO until 1956, by Henry Ford’s son. Ford Motor Corporation is still the number 2 auto maker, and at times has been number 3. Mr. Alaor points out that the IPO is very important to a company’s growth and viability and also presents a “win-win” for both the company and John Q. Public. This is because when a private person owns a little piece of a big corporation, they have a vested interest in promoting that company. The company wins by having access to a quickly-growing pile of much needed capital. Read this article for more about Marcio Alaor’s bullish stance on automakers.
There are many great investment inroads with automakers, despite the media’s sensationalized hype about minor technicalities, such as happened in the Volkswagen scandal. Mr. Alaor says these are aberrations that do not negatively affect automaker stock values in the long term. Investors look at the product quality and overall value, which is little affected by some emissions sensor miss-calibrations.