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Minister Noonan updates Cabinet on potential AIB IPO

The Minister for Finance, Michael Noonan T.D. has today provided an update to the Cabinet on preparations being made by the Department of Finance for a potential Initial Public Offering (IPO) of AIB. Any proposed sale will be within the parameters provided for in the Programme for a Partnership Government. Any such sale is expected to take the form of an IPO on the Irish and London Stock Exchanges and to comprise up to 25% of the State’s shareholding[1].
Minister Noonan said that the key objective of an IPO would be to maximise the return for the taxpayer on its investment in AIB.
Key elements of the briefing provided to the Cabinet included:
Substantial progress being made with IPO preparations
Minister Noonan said that the Department of Finance has made substantial progress with preparations for a potential transaction. In December 2016 the Department of Finance announced the appointment of Bank of America Merrill Lynch, Davy and Deutsche Bank as Joint Global Coordinators to assist on a potential IPO. These are the senior appointments in the banking syndicate which would ultimately be tasked with marketing and distributing the State’s shares to investors once a decision to proceed with a sale is taken. On Friday last, the Department of Finance also commenced another Request for Tender (RFT) seeking to appoint Bookrunners and Co-lead Managers to the selling syndicate. These appointments are expected to be made in the coming weeks.
Strong financial performance by AIB in FY2016
Minister Noonan also noted AIB’s financial results published last week which detailed the Bank’s strong financial performance in 2016. On the basis of these results, AIB confirmed its intention to pay a dividend of €250 million. This will be the first dividend paid by AIB for nine years and reflects the considerable progress being made by the Bank.
Potential Retail Offer
Minister Noonan also advised the Cabinet that his officials, together with Rothschild & Co. and the Joint Global Coordinators, are examining options in relation to a potential retail offer which would provide individuals with the opportunity to participate in an IPO at the same price as institutional investors. While the details of any retail offer remain to be decided, the Minister noted that it was likely that interested retail investors would be able to apply for shares through designated intermediaries or brokers (as was the case with the Aer Lingus IPO in 2006), that a minimum investment threshold will be considered, and that potential retail investors would not be offered incentives to participate.
Potential Timings
Minister Noonan also briefed the Cabinet on potential timelines. It was noted that the various advisors have been appointed until July 2018 which allows the flexibility to target a range of IPO windows through 2017 and into H1 2018 depending on market conditions.
Minister Noonan advised that the Department was working to ensure that the transaction could proceed at any time during this window including from May or June of this year if conditions were favourable at that time.
[1] Excluding overallotment option.