Ireland raised €3 billion by selling a quarter of Allied Irish Banks yesterday in a remarkable turnaround for a company at the forefront of reckless lending during the “Celtic Tiger” boom.
The sale took the overall return for the state from AIB to nearly half the €21 billion spent to bail the bank out after a massive property crash in 2009, the biggest bill for any Irish lender still trading.
The state ended up with 99.9 per cent of AIB and has been nursing it back to health, with the aim of eventually recouping all the taxpayer money it ploughed into the lender, one of three it managed to save in the eurozone’s costliest state rescue.
The initial public offering of 25 per cent of AIB’s shares at €4.40 each was the third largest European bank listing since the financial crisis and the biggest IPO of any kind in London by market capitalisation in almost six years.
“The successful completion today of AIB’s IPO represents a significant milestone,” Finance Minister Paschal Donohoe said of the long-awaited share sale his predecessor Michael Noonan launched in May.
“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,” Donohoe said.
In the biggest test yet of investor appetite for the Irish banking sector since the crisis, the AIB shares on offer were four times oversubscribed and sold at the midpoint of an initial €3.90 to €4.90 range set last week.
The sale price valued the bank at €11.9 billion, meaning investors only received a three per cent discount to the bank’s book value of €12.3 billion at the end of 2016 – or 0.97 times tangible book value.
That put AIB shares at a premium to its main Irish rival Bank of Ireland, which trades at 0.87 times book value, and towards the level of European rivals such as Lloyds and ABN Amro.
Shares in the bank climbed seven per cent to €4.71 in unofficial trading ahead of next Tuesday’s formal debut on the Dublin and London stock exchanges.