Fairfax Selling Half Its Bank of Ireland Stake After Shares Gain

Prem Watsa’s Fairfax Financial Holdings Ltd. began selling half of its 5.8 percent stake in Bank of Ireland Plc, four years after the Canadian insurer’s investment helped save the lender from state ownership.

Deutsche Bank AG is placing 935 million Bank of Ireland shares for Fairfax in a range between 35.8 euro cents and 37.3 euro cents apiece, two people with knowledge of the process said Monday, asking not to be identified as they aren’t authorized to comment. The placing is valued at as much as 349 million euros ($378 million) and equivalent to a 2.9 percent stake in the bank, according to data compiled by Bloomberg.

Fairfax is selling the shares for almost four times the 10 cents a share it paid when it jointly invested 1.1 billion euros for a 34.9 percent stake in 2011, alongside U.S. billionaire Wilbur Ross’s WL Ross & Co. and three other investors. The deal helped the Dublin-based bank avoid state control as its bad loans soared after a real-estate collapse.

“The reduction in Bank of Ireland anchor investors’ stakes is a natural consequence of the bank’s normalization,” said Diarmaid Sheridan, an analyst at Davy Stockbrokers who rates the shares outperform. “Its evolving share register is a reflection that Bank of Ireland is moving towards becoming a dividend stock in the next phase of its recovery.”

Ross and Toronto-based Fairfax sold about 2 billion shares in the bank in March last year at 32.8 cents each, with Ross disposing of its final holding in June.

Officials from Fairfax didn’t immediately respond to phone calls and e-mails seeking comment. Anne Mathews, a spokeswoman for Bank of Ireland, declined to comment.

Since taking over as chief executive officer six years ago, Richie Boucher shrank Bank of Ireland’s balance sheet, cut jobs and returned 6 billion euros to taxpayers after receiving a 4.8 billion-euro bailout. Having returned to underlying profit last year for the first time since 2008, the bank expects its loan book to grow, Boucher said in an interview last week, after contracting 38 percent during the crisis.

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