LAST UPDATE | 28 Jan

THE GOVERNMENT IS set to sell a further 5% of its stake in AIB for around €652 million and could exit the bank later this year.

The latest sale will reduce the State’s shareholding in the bank from 17.5% to 12.5%, according to a statement from the Department of Finance. 

The state initially built up the shareholding in AIB after rescuing the bank following the 2008 financial crisis.

The Government plans to sell 116 million shares immediately to institutional investors. The actual number of shares sold will depend on market conditions, among other factors, the statement said. 

Finance Minister Paschal Donohoe said the State has launched “a further sell down of its shareholding in AIB by way of an accelerated bookbuild (ABB) transaction”.

This is a process in which shares can be offered and sold in a short period of time, with little to no marketing or promotion.

Donohoe today said the State sold a 5% stake in AIB at a price of €5.60 per share, which will generate around €652 million upon settlement.

This will bring to around €17.9 billion the total amount returned to the State to date from its investment in AIB.

“This ABB transaction represents our sixth such disposal in AIB and will reduce the State’s shareholding in the bank by a further 5%,” Donohoe said.

Donohoe also said that any further stake in the company will not be sold for at least 90 days following this sale, without prior written consent by the joint bookrunners.

He added that with each ABB transaction completed by the State, it has “achieved incremental improvements on the placing price while also managing to tighten the discount”.

“This latest transaction achieved a price which was 14% higher than what was achieved in the previous transaction last June,” said Donohoe.

“Once again, this transaction was well received with significant demand from a large number of high quality international institutional investors.”

The state’s shareholding in AIB has been brought down from around 71% at the beginning of 2022 to 12.5% today, and Donohoe it is now a realistic target that the State could exit its position in AIB later this year.

Meanwhile, AIB Group Chief Executive Officer Colin Hunt, said the transaction is “another important milestone in the process of returning the State’s investment in the Group and a normalisation of the share register”.

He added that it will return more money to “Irish taxpayers to whom AIB is deeply grateful, for their support during the financial crisis”.

Rothschild & Sons is working with the Government as an independent financial advisor while William Fry and Allen & Overy are working as legal counsel to the Department on the sale.

-With additional reporting from Diarmuid Pepper