The Irish government is seeking to raise as much as 3.8 billion euros (US$4.26 billion) from its first sale of shares in nationalized lender Allied Irish Banks PLC (AIB), in what would be the biggest listing in London so far this year.
Shares in the bank are to be sold for between 3.9 euros and 4.9 euros each, the Irish Department of Finance said in an e-mailed statement.
The price is to be finalized by about Friday next week and shares would start trading unconditionally on the London and Irish stock exchanges on June 27.
The deal might eventually price at about 4.5 euros per share, raising about 3 billion euros, according to a person familiar with the process, although the final figure would 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 normalizing of AIB since its near collapse during the 2007 to 2008 financial crisis.
The government spent 21 billion euros saving the bank, which helped push the nation into an international rescue program.
The formal price range would give AIB a market capitalization of 10.6 billion euros to 13.3 billion euros.
At those valuations, the sale might raise as much as 3.8 billion euros 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,” Irish Minsiter of 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 might 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 Group as global coordinators for the sale, while 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.
London listing:
‧ Dublin is seeking to sell one-quarter of its shares in Allied Irish Banks PLC.
‧ The price of the shares is to be finalized on Friday next week.
‧ The Irish government spent 21 billion euros to rescue the bank during the financial crisis.
‧ The sale might raise about 3.8 million euros.
‧ The UK’s Brexit vote and last week’s election are seen as risk factors.
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