Wilbur Ross, the U.S. billionaire investor in struggling industries, sold part of his stake in Bank of Ireland Plc, more than tripling his money with his bet on the lender. The bank’s shares tumbled.
Deutsche Bank AG and Davy, Ireland’s largest securities firm, placed about 2 billion Bank of Ireland shares today on behalf of Ross and Fairfax Financial Holdings Ltd. The shares, equating to a 6.4 percent stake in the largest Irish lender, were sold at 32.8 euro cents each, Deutsche Bank said in a statement. The investors paid 10 cents for the shares in 2011.
“We had not been shopping the block and have no present plans to sell any more of our holding,” Ross, 76, said in an e-mailed response to questions, adding that he decided to sell some shares following an approach from Deutsche Bank. “We remain totally confident in management.”
Ross’s WL Ross & Co., Fairfax and three other investors paid 1.1 billion euros ($1.5 billion) for a 34.9 percent stake in Bank of Ireland. The accord helped the Dublin-based bank avoid state control as its bad loans soared in the wake of a real-estate collapse. The lender said yesterday it is trading profitably for the first time since 2008, as soured loans started to decline.
“Given the appreciation in the bank’s share price and its current premium valuation, we are not surprised to see some of the original North American anchor investors move to take some cash off the table,” said Ciaran Callaghan, an analyst at Dublin-based Merrion Capital. “In some sense, they have done their job and made their return.”
Bank of Ireland fell as much as 12 percent, the biggest decline since May 16 2012, and traded at 32.4 cents as of 4:30 p.m. in Dublin. The shares have advanced about 138 percent in the past year, giving the lender a market value of 10.5 billion euros.
The sale represents more than a third of Ross and Fairfax’s stakes in the bank. The disposal today raised about 681 million euros, more than the two investors paid for their entire stake.
The 2011 group, which also included Fidelity Investments, Kennedy-Wilson Holdings Inc. and the Capital Group, helped the lender avoid nationalization, as a raft of its rivals fell under government ownership.
Ross sought out troubled banks as the financial crisis hit in 2008. His firm was one of four private-equity groups that paid $900 million for the failed BankUnited Inc., purchasing it from the Federal Deposit Insurance Corp. in May 2009.
While WL Ross and Fairfax each acquired 9.3 percent of Bank of Ireland, their stake fell when the lender sold 580 million euros of shares in December to partly refinance the state’s 4.8 billion-euro bailout of the lender since 2009.
The position was “too big and too concentrated for us now,” said Paul Rivett, president of Fairfax, in an e-mail. The firm plans to hold its remaining shares for the “long term,” he said.
Chief Executive Officer Richie Boucher, in the job five years, has shrunk the bank’s balance sheet, returned 6 billion euros to taxpayers and cut about 2,000 jobs since the five investors took a stake in the bank.
Signs are emerging that the Irish economy is on the mend. Home loan arrears of more than 90 days fell in the fourth quarter for the first time since the central bank started the series in 2009, it said today. Consumer confidence rose to an almost seven-year high last month, according to KBC Bank Ireland Plc and the Economic & Social Research Institute.
Finance Minister Michael Noonan has also signaled he plans to sell taxpayers’ remaining 14 percent stake in the bank in time. He said in an interview with Bloomberg Television in January that he is “under no pressure” to do so.
Pat Farrell, a spokesman for the bank, declined to comment on any sale of shares.
“While possible supply may temper share price performance, we are still fans of the Bank of Ireland story over the medium term and would regard any technical weakness as an opportunity,” said Eamonn Hughes, an analyst at Dublin-based Goodbody Stockbrokers, who rates the stock a buy.