AIB market return puts Irish taxpayer close to break-even
IRISH taxpayers came within touching distance of breaking even on their €20.8 billion (£18.3 billion) bailout of big four lender Allied Irish Bank today after it returned to the stock market.
The bank, which almost collapsed during the financial crisis, sold shares to investors at €4.40, giving it a €12 billion valuation.
The float in London and Ireland offers the Irish government an easy exit route from its holdings in the lender following its nationalisation between 2009 and 2011. AIB was one of the poster boys for Ireland’s financial crisis, and its return to public hands will be welcomed by politicians as a sign Ireland is on the mend.
The Irish government, which has already recouped a €7 billion repayment from AIB, today sold a quarter of the shares for €3 billion and retains the others, worth €9 billion — putting AIB’s current IOU at €19 billion.
In early trading, the share price rose as much as 7.7% to €4.74 — a sign that shares could soar higher when they officially debut on Tuesday. Irish finance minister Paschal Donohoe said: “The offer was very well-received and attracted high demand from investors everywhere it was marketed, reflecting the strength of AIB’s investment story and prospects, and the attractions of Ireland’s vibrant and growing economy.”
The shares were priced in the middle of a predicted range of €3.90 to €4.90.
Sources said order books were four times oversubscribed.
The share-price surge poses a risk for the Irish government, with sales of previously nationalised companies such as Royal Mail prompting criticism they were sold too cheaply. Alert to this, the Irish government has established a series of warrants allowing it to buy shares back at a cheaper price if the shares get too toppy.
About 10% of the shares sold were to retail investors, with nearly all applicants getting €50,000 worth and up in the offer. The rest were sold to institutional shareholders, including hedge funds.
AIB chief executive Bernard Byrne said stronger market sentiment for banks had improved demand for shares in AIB.
@signorbow