Permanent TSB funding cuts State stake to 75%

Permanent TSB has completed its €525m capital raise, which values the business at €2bn and lowers the Government’s shareholding in the bank to 75%.

Yesterday’s much-heralded move saw €400m raised through the sale of 88.9m ordinary shares at the very top end of PTSB’s recently announced price guidance, of €4.50 per share. The remaining €125m was, as expected, raised via a bond sale.

As announced last week, PTSB will now return €410.5m to the State (the remainder will go to shore-up capital shortfalls identified in last year’s ECB stress tests), via the repurchase of contingent capital notes.

The bank will seek full share listings on the Irish and London stock exchanges. Up to now, 0.8% of PTSB’s shares were listed on Dublin’s ESM (Enterprise Securities Market), with the Government holding the remaining 99.2%.

Following the capital raise, the State’s holding in PTSB is now down to 75%, with the Government recouping €509m, when capital receipts from the sale of shares are included.

Finance Minister Michael Noonan welcomed yesterday’s news, saying it marks “a significant milestone” in the bank’s recovery.

“Completion of the capital raise will enable PTSB to further progress its restructuring plan and to maximise the return for the State on its equity investment,” he said.

“While much work remains to be done to complete the restructuring of PTSB, I am satisfied with the continued progress and, in particular, the fact that the capital raise was completed without the need for, or even contemplating, investment from the State, further highlighting the progress that the board, management team, and staff have made since 2011.”

Mr Noonan said the dual flotation will also allow the State “additional flexibility and liquidity” to manage its sell-down of PTSB in the future.

PTSB will now progress with its open offer — allowing existing shareholders to acquire shares on a one-for-one basis at the same terms as new investors were offered yesterday — which will close within three weeks.

PTSB chief executive Jeremy Masding said the transactions have underlined the bank’s potential.

“The investors we have spoken to see the potential of this bank to become an increasingly significant competitive force in the banking sector here,” he said. “They know we continue to have challenges, but they are confident that we can overcome them and grow a stronger, profitable, and vibrant franchise in the market here.”

Mr Masding added that the level of investor interest had been “exceptional”.