Tuesday 20 February 2018

Share allocation, not price, was the battle inside the deal

The retail reception to the float was relatively muted.. Stock photo
The retail reception to the float was relatively muted.. Stock photo

Gretchen Friemann

The top 10 investors in the AIB deal hoovered up close to a third of the available stock, the Irish Independent has learned, with bluechip fund managers like Blackrock, Fidelity and Capital Group expected to rank towards the top of the register.

In contrast as many as a third of the institutional investors that placed orders in the IPO did not receive any shares.

Hedge funds were also left out in the cold with their bids for large volumes of stock scaled back so that just 10pc of their orders were filled as the Government went out of its way to put shares in the hands of longer-term investors from top-tier institutions. In total the nine-strong banking syndicate registered 350 institutional orders for the stock. An additional class of retail investors took 10pc of the total.

Bernard Byrne, AIB's chief executive, described the successful listing as a "landmark day for the bank" and the listing does mark a milestone.

Even so, London-based sources said the strict allocation policy and preference for certain corners of the market may prove a source of friction next time AIB goes to sell shares.

The retail reception to the float was relatively muted.

Smaller investors accounted for less than the targeted €500m of shares - even though those who did submit orders were treated far better than many institutional shareholders when it came to allocation.

In contrast to the scale-backs for hedge funds, retail orders up to €50,000 were filled in full. Above that level orders were scaled back, by 50pc.

Despite the frustration among some less favoured fund managers, Irish institutional managers praised the handling of the deal. Noel O'Halloran, chief investment officer at KBI Global Investors, claimed the share sell-down was priced "fairly" and should ensure a "robust after-market for the next 72pc".

The listing ends a frenetic period of preparation by AIB management. For the past three years executives have been laying the groundwork for the float and sources said the workload ratcheted up dramatically in the past six months. One insider described it as the management's "sole focus" in the final stretch.

If true, Bernard Byrne's team might take the weekend off to recharge, but with taxpayers still down more than €10bn on their AIB investment, there's still a long way to go before we can start talking about "mission accomplished".

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