Ireland Raises 3 Billion Euros in Allied Irish Banks Sale

Updated on
  • Sale of 25 percent of lender is Europe’s biggest IPO this year
  • Shares get off to a ‘positive start’ in London trading: Cantor

Ireland raised about 3 billion euros ($3.4 billion) selling a 25 percent stake in Allied Irish Banks Plc, returning the bailed-out lender to the market seven years after it helped tip the country into financial ruin.

Ireland sold about 679 million shares at 4.40 euros apiece, valuing the nation’s second-largest lender at about 12 billion euros. That’s in the middle of the previously announced range. The government sold an additional 3.75 percent of its holding in a so-called green shoe, increasing the amount raised to 3.4 billion euros.

The shares rose as much as 7.6 percent to 4.73 euros, and were up 6.6 percent at 4.69 euros as of 9:45 a.m. in London. Underwriter Deutsche Bank AG will retain the green shoe proceeds for 30 days to support the share price if required.

“Interest has been strong this morning,” said Stephen Hall, an analyst at Cantor Fitzgerald LP in Dublin. “It’s early days but so far trading has had a positive start.”

The share sale, Europe’s biggest this year, is the latest step in the rehabilitation of AIB since its near-collapse during the financial crisis helped push Ireland into an international rescue. The nation spent 21 billion euros saving the company when the real-estate boom that the lender fueled went sour. As the biggest player in the Irish mortgage market, AIB is viewed as a proxy for the economy, which is growing at about twice the pace of the euro region.

‘Vote of Confidence’

“The level of investor interest and support for AIB and Ireland is a great vote of confidence in the strength of the turnaround in the bank and the wider economy,” AIB Chief Executive Officer Bernard Byrne said in a statement. “It paves the way for the full recovery of the investment in AIB, over time, as we return to full private ownership.”

The biggest IPO in London since Worldpay Group Plc’s flotation in 2015 values AIB at about 0.9 times book value. That compares with 0.8 times for Bank of Ireland.

Since the bailout, AIB has transformed from an international player to a lender focusing on its home market. It sold holdings in lenders in the U.S. and Poland, as well as stockbroking and other businesses.

Those moves have helped reduce job numbers to about 10,000 at the end of 2016 from almost 26,000 in 2007. Almost 90 percent of the bank’s profits now come from Ireland and staff numbers are likely to fall further, Byrne has said.

Biggest Deal

AIB’s sale surpasses the $762 million BioPharma Credit Plc raised when it listed in March. It also exceeded Galenica AG’s $1.9 billion sale, also in March, to become the biggest IPO on a European exchange so far this year.

“This successful IPO has created a strong platform for the state to recover all the money it has invested in AIB and to further dispose of our banking investments for the benefit of the Irish people,” Irish Finance Minister Paschal Donohoe said. “The offer was very well received.”

Pricing the deal was the first major decision for Donohoe, who replaced Michael Noonan earlier this month. Donohoe is seeking to avoid accusations that he left taxpayers’ money on the table if the stock surges too far in its first days, an outcome that prompted criticism of the U.K. government when it sold shares in Royal Mail Plc in 2013.

Should the bank’s value surge, the government has the right to buy newly issued shares worth as much as 9.99 percent of AIB’s ordinary share capital at twice the IPO price.

(Adds greenshoe in second paragraph, analyst comment in fourth.)
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