As Lyft Eyes IPO, GM Remains A $500 Million Investor

Rumor has it that Lyft Inc., the second-largest ride-hailing company in the United States, has taken the first steps in the process for an initial public offering (IPO). The development is notable, as General Motors invested a not-insignificant $500 million in the start-up back in 2016, a stake it continues to hold today.

Lyft IPO Begins To Take Shape

Lyft has hired Class V Group LLC, an IPO advisement firm, that works closely with management on the IPO process. According to insiders, the company plans to begin taking pitches from banks in September for a potential listing date in April or March. Though the timing could very well change, Lyft could be looking to go public before its primary rival, Uber Technologies Inc., which has announced plans to hold its IPO in 2019.

“A variety of factors will determine if and when Lyft goes public, but in the meantime we are focused on building our business, which continues to grow,” Lyft spokeswoman Alexandra LaManna said in a statement. “We don’t comment on rumors or speculation.”

A Potential Upside For GM

Depending on a multitude of factors, GM could see substantial upside from Lyft hitting the public markets. Its $500 million investment came in the middle of the start-up’s development, and could be worth significantly more once the IPO takes place.

How Lyft plays the public offering game is vital. The biggest concern is whether Lyft schedules its offering before that of Uber, around the same time, or after. Being first to the punch could set the tone for ride-hailing firms and draw attention from the larger Uber, while also diverting investor money that would have otherwise gone to Uber. But by going first, Lyft also faces the possibility that investors hold out for its bigger and more valuable competitor.

GM And Lyft

In January 2016, General Motors announced a $500 million private investment into Lyft. The move gave GM President Dan Ammann a seat on Lyft’s board of directors.

At the time, the two firms envisioned a close partnership wherein GM would lease its vehicles to Lyft drivers for short periods of time, while also providing fleets of self-driving cars for Lyft’s network. Not long after, Lyft began to stray. Its first digression was partnering with Ford in 2017 to develop self-driving technology, followed by a tie-up with Google’s Waymo. The final straw came this March, when Lyft announced a major partnership with automotive supplier Magna International Inc.

We had previously reported that Ammann had to recuse himself from numerous decisions at Lyft following the plethora of new partnerships. What’s more, GM’s continued focus and investment in its Cruise Automation subsidiary quickly became a point of contention between the two firms.

How much GM stands to make from a potential Lyft IPO is a fascinating topic for GM watchers and enthusiasts, so stay tuned to GM Authority as we follow this one closely.