€3bn sell-off returns AIB to markets after 7 years
Michael Noonan latest night formally launched the long anticipated €3bn sale of shares in AIB in a move that returns the lender to the stock exchange almost seven years after it was nationalised.
The move will see the Government sell 25pc of the almost entirely State-owed bank. The balance – worth around €9bn – will be sold off over time.
In a statement the Finance Minister said: “The Government’s long-held policy is that the State should exit its banking investments in a measured and prudent manner, returning ownership to the private sector over time.”
He said the decision to sell is “a significant step in the continued normalisation of the State’s involvement in Ireland’s banking system and reaffirms the Government’s commitment to recovering its investment in AIB for the benefit of the Irish people”.
Mr Noonan had told his cabinet colleagues yesterday that an announcement on the sale of €3bn of AIB shares would be made “within 48 hours”.
The announcement coincides with an intention to float (ITF) document being filed with the Dublin and London stock markets and posted to investors this morning through the markets’ regulatory news service (RNS).
That will begin the formal run-in to what is in effect Europe’s biggest stock market listing this year.
For Mr Noonan, pictured, returning AIB, the biggest lender in Ireland, to at least part-private hands will mean his seven years as Finance Minister ends with a significant recoup of cash for the Exchequer from a bank that was close to collapse before he took office.
Despite calls from Labour and Sinn Féin to spend the proceeds of the sale on infrastructure projects, the cash will be used to reduce the national debt, the minister has stated.
That is in part because EU budget rules make it difficult for governments to use the proceeds of one-off assets sales and windfalls for day-to-day or even capital spending.
The national debt here ballooned during the crash and has continued to rise since. At the end of last year the State owed a record €185.6bn compared to €37.5bn in 2007, according to figures from the National Treasury Management Agency (NTMA).
Yesterday, Cantor Fitzgerald analyst Ryan McGrath said the Government will most likely use proceeds from the AIB share sale to increase “the pace of the cancellation of the Irish floating rate notes held by the Central Bank of Ireland”.
Once Mr Noonan lodges the formal (ITF) document that will trigger a series of prescribed steps culminating in the sale of shares to large and then small investors.
The syndicate of nine investment banks working on the deal will send out analysts’ research on AIB to potential investors.
AIB’s book value is currently €11.3bn. Sources told the Irish Independent that the deal would likely equate to a market capitalisation of €12bn – slightly higher than book value and relatively high compared to many European peers. Shares will be traded by around June 28 or 29.