The Department of Finance is set to sell approximately 5% of AIB Group’s stock, generating around €500 million for the taxpayer. This move will decrease the State’s overall stake in the bank from roughly 51.9% to about 46.9%. This transaction is a significant step towards the privatization of both AIB and the State, following the government’s decision to nationalize the bank in 2011 due to significant losses from bad loans during the Celtic Tiger era.
The placement, which is restricted to institutional investors, is scheduled for Tuesday evening through an accelerated book building process. The results will be announced early Wednesday morning. While the exact price of the transaction remains unknown, AIB shares closed at €3.82 in Dublin, giving the bank a market capitalization of just over €10 billion.
This placement follows the bank’s directed buyback of €215 million of State shares in April and coincides with the Department of Finance’s plan to sell approximately 1% of AIB shares per month. Since its initiation in January 2022, this trading plan has raised €698 million, in addition to previous block transactions such as a €400 million placement in November last year.
AIB chief executive Colin Hunt embarked on an international marketing road trip in March, the first in three and a half years, to update investors on what he describes as a “knockout year” for the bank. AIB’s total income saw a 21% increase in 2022, reaching almost €2.9 billion, driven by higher interest rates and resulting revenue growth.
During the road trip, Mr. Hunt engaged with several institutions interested in acquiring stakes in AIB or expanding their existing positions. However, due to the government’s majority stake, these eager investors have had limited opportunities to purchase bank shares. The latest transaction will help meet this demand, as approximately 10% of AIB’s stock will have been made available this year alone.
In conjunction with the placement, Minister for Finance Michael McGrath announced an extension of the drip-feed trading plan until the end of the year. If the program is completed as planned, the State’s stake will be slightly above 40% by the end of 2023.
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