The state has raised €3.4 billion with its AIB float

THE DEPARTMENT OF Finance has announced that is has offloaded nearly 25% of the state’s AIB shares, raising €3.4 billion in the process.

The bank’s return to the public markets is the largest IPO in Europe so far this year, with the shares eventually selling for €4.40 each – in the middle of the range set with the offer was first announced.

AIB shares start trading on the market this morning, with the bank’s initial market value priced at around €12 billion – 56% higher than rival Bank of Ireland’s €7.67 billion capitalisation. The share prices has since risen nearly 6%.

The shares were bought by 350 different financial institutions, with 10% of shares allocated to ordinary investors. About €41 million from the sale will go in fees to firms charged with marketing the IPO to investors.

The state initially sold 25% of its shares before exercising the option to offload another 3.75% for a further €400 million.

The secondary sale took the total the state has recouped from the bank’s €20.8 billion bailout above €10 million, including the near-€7 billion sum AIB has already paid out in dividends and other redemptions.

AIB CEO Bernard Byrne last month said the bank was “now within touching distance” of repaying all of its bailout funds, although the government hasn’t set out any timeline for when it plans to offload further shares.

A significant milestone

In a statement following the float, Finance Minister Paschal Donohoe said the sale “represents a significant milestone in the government’s long-held policy to dispose of our banking investments, returning them to the private sector over time”.

“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.

“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.”

AIB received the biggest bailout of all the state’s lenders, more than four times the €4.7 billion put into Bank of Ireland and the €4 billion pumped into Permanent TSB and Irish Life.

The state still holds a 75% stake in Permanent TSB and 14% share in Bank of Ireland. Donohoe said he may return to Cabinet to get backing for further bank share sales “if opportunities were to occur that I believe offered long-term value for the taxpayer”.

Note: This article has been updated to reflect the government exercising its option to sell further AIB shares today.

Written by Paul Hosford and Peter Bodkin.