| Deals of the Year 2023: Successful block trades pave the way for State to exit AIB |
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| The Department of Finance executed it first block trades in AIB shares in 2022 as part of its strategy to return ownership of Irish banks to the private sector and monetising the State’s stake. The successful block trades, executed in June and November, heavily reduced the State’s shareholding, paving the way for future sales. |
The two separate block trades by the Department of Finance were strategically important transactions for the Irish State and the continued the process of monetising the State’s investment in AIB while normalising the share register of Ireland’s largest lender.
The first block trade saw the Department of Finance sell-down approximately 5% of the State’s shareholding in AIB, reducing the State’s stake to 63.5% (a separate trading plan had already reduced the stake from c.71% to 68.5% since the beginning of 2022). The transaction was executed through an accelerated book building process to institutional investors by arrangers Goodbody Stockbrokers and Goldman Sachs. The June transaction was a significant milestone in the Irish Government’s strategy of returning Irish banking to the private sector. The transaction was well-received by a large number of institutional investors despite market volatility and was significantly over subscribed and opened the door for a repeat block trade later in the year. | | Goodbody's David Kearney |
Following a lock-up period of approximately three months following the initial block trade, the Department of Finance returned to the market to sell-down a further portion of the State’s shareholding in the bank. Upon completion of the second block trade, once again executed through an accelerated book build (with arrangers Goodbody Stockbrokers and Goldman Sachs being joined by JP Morgan on this second transaction) saw the State’s stake in AIB drop to 57%.
Both transactions were significantly over-subscribed with strong interest from long-only investors and hedge funds around the globe including US investors (45%), UK investors (40%) and EU investors (15%). Goodbody Stockbrokers remarked that as part of the transactions, a number of high quality institutional shareholders were also brought onto the register, ultimately providing the platform for the Minister of Finance to continue to monetise its shareholder for years to come. Reflecting the strong market and exceptional execution the discount was minimised and the second block trade was completed at 1.1% discount to the previous 5-day average share price with the share price continuing to perform strongly in the aftermarket.
The Minister for Finance Paschal Donohoe speaking at the time of the second trade said, “The State has made good progress this year in reducing its shareholding in AIB from 71.1% at the beginning of the year to 57% today...this Government believes that banking is an activity that should in the main be provided by the private sector and that taxpayer funds which were used to rescue the banks should be recovered and used for more productive purposes...we continue to make progress in achieving this goal.’
“Goodbody has been delighted to support the Government in its programme to realise value from its investment in AIB Group, and widen the shareholder register. Our ability to create strong demand and new shareholders at highly competitive pricing has ensured these objectives have consistently been met,” said David Kearney, Head of Corporate Broking at Goodbody.
Advisors on the transactions include the arrangers Goodbody Stockbrokers and Goldman Sachs (both for the June and November transactions); and JP Morgan (November transaction only); William Fry (advised the Department of Finance); Allen Overy (Department of Finance); Rothschild & Sons Limited (financial adviser to the Department of Finance). |
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