The Irish state has achieved a symbolic marker of dropping its stake in AIB Group below 50% following a €480.5m accelerated bookbuild on Tuesday night, but there are still years of selling before it is likely to exit the financial crisis-era shareholding.
The 5% sale takes the Irish government's stake to 46.9%, which will continue to fall due to an ongoing trading plan that dribbles out shares into the market and is set to run until at least January 23. Bank of America runs that programme and was a bookrunner on the ABB alongside Goldman Sachs and AIB-owned Goodbody. This is the third ABB by the state in AIB and Goldman and Goodbody have been involved in all three. Rothschild advised again.
The three ABBs combined with the dribble-out, which began in January 2022 and has raised €698m to date, have reduced the state's holding by about a third from 71.1%.
A banker involved in Tuesday’s sale said that there had been enquiries from investors about another sale since not long after the previous ABB. The government sold 5% of AIB in November and 5% a year ago on June 27 2022.
A second banker said it is important that terms have improved on each sale, with pricing of €2.28 per share in June 2022, €2.96 in November and €3.64 on Tuesday. The sales have also come with progressively tighter discounts of 6.5%, 5.1% and 4.8%, which also reflects the improved liquidity of the stock as the government's stake falls.
“This was a known seller that has done previous blocks and with a live trading plan so they were known to be actively managing this position, hence we got plenty of reverse enquiry," the first banker said. "It was the same size as before but the value was higher as the stock has really performed.”
A one-day wall-crossing exercise preceded the latest sale of 132m shares and meant it was multiple times covered on indications at launch and several times covered at pricing.
AIB shares had risen 3.7% this year as of Tuesday's close. They fell 2.4% on Wednesday to €3.73, still well above pricing.
AIB chief executive Colin Hunt said that the return to majority private ownership was a significant milestone and “AIB owes the Irish taxpayer an immense debt of gratitude for its support during the financial crisis”.
Around half the shares went to the top 10 orders, from a 90-line book, with a broad spread of allocations reflecting the long list of shareholders looking to participate. There were a few anchor orders for the sale, which represented approximately 14 days' trading.
It is only the second European bank trade since the turmoil of SVB and Credit Suisse in March and is substantially larger than the €110.5m ABB in Permanent TSB in early June in which the Irish state was also a seller. Where the Irish has led other European governments could follow.
There is a 90-day lock-up on further AIB sales, with a 45-day pause on the trading plan.