Business Irish

Sunday 26 January 2020

Uncertainty hangs over AIB flotation after UK election result

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Charlie Weston

Charlie Weston

UNCERTAINTY now hangs over the flotation of AIB following the inconclusive results of the UK election.

This has raised the prospect that Government could delay the offering until the autumn if it emerges that investors demand a low price for the shares.

Sources close to the flotation process said share sale was going ahead for now, but the situation would be assessed over the next few days.

There are now fears that the lack of a clear winner in the British election will have a big impact on the price investors are willing to pay to buy into the country’s largest retail and commercial bank.

This could mean the flotation could raise less than the hoped-for €3bn.

The Department of Finance had been expected to issue the price range for the AIB initial public offering (IPO) in the middle of next week.

On the same day it is due to release the flotation prospectus, a legal document that sets out all the details about the bank and the investment offering.

The issuing of the price range and the prospectus had been pencilled in for Wednesday, which is due to be Finance Minister Michael Noonan’s last day in office.

There are now indications that the issuing of the price range could be pushed back by a couple of days or could even into the following week.

And the IPO could even be postponed until the autumn.

A person familiar with the situation said: “The flotation is proceeding at the moment, but big decisions on the price range have to be made in the next few days.”

Advisers to the Government, Rothschild, Bank of America Merrill Lynch, Davy, Deutsche Bank, and Investec Bank, had a pre-scheduled meeting with the Department of Finance yesterday to discuss the flotation process.

They are expected to wait a few days before deciding on whether the share sale should go ahead as planned this month.

Up to now investor appetite for AIB’s flotation has been positive and the Department of Finance is understood to be satisfied with the level of interest so far.

A spokesman for the Department of Finance said: “The transaction timetable was designed to cater for the UK election. We remain on track to issue a price range prospectus over the next week or so.”

It is planned to sell 25pc of the lender, with expectations that around €3bn would be raised for the Exchequer from the Dublin and London Stock Markets share sale.

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