AIB Takes Spotlight as Ireland Plans Biggest 2017 London IPOBy , , and
Government plans to sell 25% of lender nationalized in crisis
Sale could raise $3.4 billion; terms to be set mid-June
The Irish government fired the starting gun for the initial public offering of Allied Irish Banks Plc, laying out a plan to sell 25 percent of the nationalized lender.
The government plans to sell the AIB stake in a share offering in London and Dublin, with terms to be set in mid-June, the country’s finance ministry said in an emailed statement Tuesday evening. According to previous government estimates, the sale may raise about 3 billion euros ($3.4 billion).
Analysts at banks working on the IPO are valuing the company at about 10 billion euros to 13 billion euros, people familiar with the matter said. The final value will depend on investor feedback, they said.
The state, which spent 21 billion euros bailing out the bank following the 2008 financial crisis, is seeking to recoup part of its investment in the first of a series of stake sales. The offering will likely be London’s largest IPO so far this year. Ireland’s government owns 99.9 percent of AIB, and Irish Finance Minister Michael Noonan has said it may take a decade to fully privatize the lender.
“There is very significant investor appetite,” Bernard Byrne, the bank’s chief executive officer, said in an interview with state-broadcaster RTE on Wednesday. “The bank is operating positively at this point in time.”
The agency that manages the government’s shareholding, the Ireland Strategic Investment Fund, valued AIB at 11.3 billion euros in February. Government officials now expect the bank to be worth more than that after the lender released its 2016 results, including a pretax profit of 1.7 billion euros and a reinstated dividend.
A valuation at 12 billion euros would suggest a price of about 4.50 euros per share. The shares rose 5 percent to 7.35 euros at 11:25 a.m. in Dublin on Wednesday, though their low trading volumes mean they aren’t a reliable guide to the lender’s value.
“There has been a very small listing, that’s resulted in some anomalies in terms of the price,” Byrne said. “Once the 25 percent hits the market, we’ll have a fully liquid stock, so you’d expect more normalized share-price movements over time.”
The pricing will be finalized after the U.K.’s election on June 8. Including the so-called greenshoe option, about 27 percent of the lender could be sold.
The government hired Bank of America Corp., Deutsche Bank AG and Davy as global coordinators for the sale. Morgan Stanley and Goodbody Stockbrokers are working with AIB.
Goldman Sachs Group Inc., Citigroup Inc., UBS Group AG, JPMorgan Chase & Co. and Goodbody are bookrunners on the deal, with Investec Plc as a co-lead manager. Fees for the advisers on the sale are as much as 14 million euros, according to the finance ministry.
If AIB raises 3 billion euros, that would imply 0.47 percent in fees. That compares with the estimated 0.25 percent the Dutch government paid when ASR Nederland NV raised 1.02 billion euros in an IPO last June, according to data compiled by Bloomberg. Companies paid an average of 3.4 percent in IPO fees in Europe in the last 12 months, according to data compiled by Bloomberg. This only includes the 51 companies that shared fee data in the period.