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AIB takes spotlight as Ireland plans biggest London IPO of 2017

Wednesday, May 31, 2017 - 11:22

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The Irish government fired the starting gun for the initial public offering of Allied Irish Banks Plc, laying out a plan to sell 25 per cent of the nationalized lender.

[DUBLIN] The Irish government fired the starting gun for the initial public offering of Allied Irish Banks Plc, laying out a plan to sell 25 per cent of the nationalized lender.

The government plans to sell the AIB stake in a share offering in London and Dublin, with terms to be set in mid-June, the country's finance ministry said in an emailed statement Tuesday evening. According to previous government estimates, the sale may raise about 3 billion euros (S$4.65 billion).

"The strong progress made by AIB and current market conditions mean that now is the right time to commence this process," Irish Finance Minister Michael Noonan said in the statement. "Today's decision is a significant step in the continued normalization of the state's involvement in Ireland's banking system." The state, which spent 21 billion euros bailing out the bank following the 2008 financial crisis, is seeking to recoup part of its investment in the first of a series of stake sales. The offering will likely be London's largest IPO so far this year. Ireland's government owns 99.9 per cent of AIB, and Noonan has said it may take a decade to fully privatize the lender.

The agency that manages the government's shareholding, the Ireland Strategic Investment Fund, valued AIB at 11.3 billion euros in February. Government officials now expect the bank to be worth more than that after the lender released its 2016 results, including a pretax profit of 1.7 billion euros and a reinstated dividend.

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A valuation at 12 billion euros would suggest a price of about 4.50 euros per share. The pricing will be finalized after the UK's election on June 8. Including the so-called greenshoe option, about 27 per cent of the lender could be sold.  The government hired Bank of America Corp, Deutsche Bank AG and 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 on the sale are as much as 14 million euros, according to the finance ministry.

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