AIB IPO to raise €3.05bn

The State is set to recoup around €3.05bn when 25% of its near total ownership of AIB is sold off to stock market investors early next week. It is marginally more than was initially targeted.

The formal pricing of AIB stock, due this morning, was expected overnight to value the bank’s shares at around €4.40, giving the bank a market valuation of €11.9bn. The bank had indicated that offers below €4.40 risked missing out on shares.

The NTMA in February valued AIB at €11.3bn, although it had an estimated value of €12.2bn at the end of 2015.

At the beginning of last week, when the Government published its initial prospectus for the partial AIB float, its guided share price range – of between €3.90 and €4.90 per share – was estimating AIB’s market value at between €10.6bn and €13.3bn, although the higher end of that range was viewed as being aspirational.

The pre-float share price range has been revised twice this week — first on Tuesday night to €4.20-€4.60 and 24 hours later to €4.30-€4.50.

While previously thought to be larger, the €3bn or so set to be recouped by the Government from next week’s IPO pretty much meets the Department of Finance’s initial targets.

It also starts the repayment process of the near €21bn the State invested in propping up a stricken AIB nearly seven years ago — although the Government views €6.6bn having already been repaid through dividend and government guarantee payments, the redemption of preference shares, and bank levy payments.

After today’s price setting, AIB’s shares will begin formal trading in Dublin and London early next week on an unconditional basis. Conditional trading begins this morning.

Early demand was seen as being strong although the narrowing of the price range showed investors had rejected the initial top range of the original guidance.

Another slight disappointment was that retail investors will hold only 10% of the new shares, putting the public’s investment at around €300m rather than a previously anticipated €400m-€500m.

“We expect an opportunity to buy at attractive levels for long-term upside when the stock floats,” said Darren McKinley of Merrion Stockbrokers.


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