Dublin: The Irish government is seeking to raise as much as €3.8 billion ($4.3 billion; Dh17.73 billion) from its first sale of shares in nationalised lender Allied Irish Banks Plc, in what would be the biggest listing in London so far this year.
Shares in the bank will be sold for between €3.90 and €4.90 each, the country’s finance ministry said in an emailed statement. The price will be finalised around June 23, and shares will start trading unconditionally on the London and Irish Stock Exchanges June 27.
The deal may eventually price at about €4.50 per share, raising around €3 billion, according to a person familiar with the process, though the final figure will be determined by the level of demand from investors. That level would equate to about 0.9 times book value.
The sale of a quarter of the government’s holding in the firm is the latest step in the normalising of AIB since its near collapse during the financial crisis. The state spent €21 billion saving the bank, which helped push the nation into an international rescue program.
The formal price range would give AIB a market capitalisation of €10.6 billion to €13.3 billion. At those valuations, the sale may raise as much as €3.8 billion including the over-allotment option.
A rump of AIB shares which trade on the Irish Stock Exchange, are not seen as a realistic indicator of the bank’s value
“I am encouraged by the strong level of interest shown by investors,” outgoing Finance Minister Michael Noonan said. “A successful transaction would represent an important milestone in our journey to dispose of our banking investments and ultimately recover all the money the Irish state has invested in AIB.”
The decision to proceed comes after bankers advising on the sale assessed what impact, if any, the lack of a decisive election result in the UK had on the price investors are willing to pay. Among the risks flagged by AIB on Monday include potential uncertainty stemming from the Brexit vote and last week’s inconclusive UK election result.
In its prospectus, AIB outlined potential risks. The government could take further measures to lower standard variable interest rates, while caps on executive pay may hurt the bank’s ability to retain staff, it said. The bank also highlights its high exposure to the Irish real estate market, which helped push it to the brink of collapse during the crisis.
The government hired Bank of America Corp, Deutsche Bank AG and Dublin-based Davy as global coordinators for the sale. Morgan Stanley and Goodbody Stockbrokers are working with AIB.
Goldman Sachs Group Inc, Citigroup Inc, UBS Group AG, JPMorgan Chase & Co and Goodbody are bookrunners on the deal, with Investec Plc as a co-lead manager. Fees for the advisers are as much as €16 million, according to the prospectus.
