DUBLIN: Ireland raised 3 billion euros (US$3.35 billion) on Friday by returning Allied Irish Banks (AIB) to the stock market in one of the largest bank listings since the financial crisis, achieving a price close to the bank’s book value.
Ireland’s government sold a quarter of its 99.9% AIB stake at 4.40 euros per share in the biggest test yet of investor appetite for a banking sector that required the eurozone’s most costly state rescue less than a decade ago.
“The successful completion today of AIB’s IPO represents a significant milestone,” Finance Minister Paschal Donohoe said of the long-awaited initial public offering his predecessor Michael Noonan launched in May.
“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.”
The price was at the midpoint of an initial range of 3.90 euros and 4.90 euros set last week and valued the bank at 11.9 billion euros, meaning investors got only a slight discount on the bank’s book value of 12.3 billion euros at the end of 2016.
At 0.97 times tangible book value, the IPO priced AIB at a premium to the 0.87 times book value its main Irish rival Bank of Ireland trades at and towards the level of European rivals like Lloyds and ABN AMRO.
By market capitalisation, the sale was the biggest IPO in London in almost 6 years and Ireland’s finance ministry said the offer was more than four times oversubscribed.
AIB will be listed on the Dublin and London stock exchanges.
“LANDMARK DAY”
It marks a remarkable turnaround for AIB which was at the forefront of Irish banks that lent recklessly during the ”Celtic Tiger” boom a decade ago. It needed a 21 billion euro taxpayer bailout to survive the subsequent massive property crash, the biggest bill for any Irish bank still trading.
But like Ireland’s economy, which is growing faster than any other in Europe, the bank has recovered strongly, posting a profit for each of the last three years and becoming the first domestically owned lender to restart dividends since the crash.
“This is a landmark day for the bank,” AIB chief executive Bernard Byrne said in a statement. ”The level of investor interest and support is a great vote of confidence in the strength of the turnaround in the bank and the wider economy.”
The return for the state brings to almost 10 billion euros the amount AIB has repaid in capital, fees, dividends and coupons since its bailout began in 2009.
Ireland put 64 billion euros into all its banks and expects to turn a profit on the half given to the three surviving banks.
Noonan said last month that it would probably take 8-10 years to fully return AIB to private ownership. The government will use Friday’s proceeds to cut some 1.5% from a national debt that the bank bailout helped to increase and that at 200 billion euros is still among the highest in the eurozone by most measures.
As the deal also includes a greenshoe or over-allotment option, the size of the IPO could rise to 28.75% if demand proves higher than expected following AIB’s debut and boost the state’s coffers by around another 400 million euros. - Reuters
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