In a significant move, the Department of Finance has successfully completed the disposal of approximately 5% of its ordinary capital in AIB through an accelerated book building process targeting institutional investors. This brings the Department’s holding in the bank down to 46.9%, marking the first time in 12 years that the State’s ownership in AIB has fallen below 50%. The gradual reduction of the government’s stake began after AIB was nationalized in 2011 due to heavy losses from bad loans during the Celtic Tiger period.
The placing price for the shares was €3.64 per share, resulting in gross proceeds of €480.5m from the sale. These proceeds will be returned to the Ireland Strategic Investment Fund once the deal is settled. However, the finance minister will be restricted from selling any further shares in AIB for a period of 90 days without the consent of the investment banks involved in the transaction.
Rothschild is acting as the independent financial adviser, while William Fry and Allen & Overy are providing legal counsel to the Department of Finance in relation to the sale. AIB’s chief executive, Colin Hunt, welcomed the decision, stating that it represents another important step towards returning the State’s investment in the bank and normalizing the share register. Hunt also expressed gratitude to the Irish taxpayer for their support during the financial crisis.
Minister for Finance Michael McGrath announced that the amount returned to the State from its investment in AIB now stands at €13bn. He highlighted that the price achieved in this transaction was approximately 23% higher than the previous accelerated book building transaction in AIB, while also attaining a lower discount. The State retains a significant shareholding of approximately 47% in AIB, valued at around €4.7bn at the current price, and will consider further opportunities for share sales in the future. The AIB share trading plan has also been extended for an additional six-month period.
The trading plan will end no later than January 23 of the following year, unless it is further extended. The Department of Finance is committed to delivering best value and will not sell shares below a pre-determined floor price, which is continually reviewed. The plan aims to sell up to, but not exceeding, 15% of the expected aggregate total trading volume in AIB. Initially announced in December 2021, AIB’s stake in the bank stood at 71.12%.
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