The Irish Government has significantly reduced its stake in AIB Group (OTC:AIBRF), marking its fourth disposal and raising €515 million ($583 million). The government sold a 5% stake at €3.93 per share, an 8% higher placing price than the previous transaction. This move has decreased the government's shareholding from 71% to 40.8%, increasing the bank's free float to 59.2%.
The sale was met with considerable demand from international investors, indicating a strong market interest in the bank. The funds raised will be used to replenish the Ireland Strategic Investment Fund, pushing total returns from AIB investments to around €13.6 billion ($15.4 billion).
Finance Minister Michael McGrath announced that following the lock-up period, further share sales will be assessed in alignment with the government's belief in private-sector banking. The remaining State's shareholding is now worth about €4.3 billion ($4.9 billion).
In the midst of a higher interest rate environment, AIB reported a "very strong" third quarter and raised its full-year income guidance for the third time this year. The bank expects a strong final quarter in 2023.
According to Morgan Stanley (NYSE:MS), the reduction of the government's stake from 1.2 billion to 1.07 billion shares was achieved through selling shares at a discounted rate of €3.93 each. This sale price represents a 3.2% discount from AIB's closing price of €4.06, indicating the strategic approach of the government towards stake reduction.
AIB is currently preparing for a new strategic phase under CEO Colin Hunt's guidance, focusing on stakeholder value creation and sustainable returns.
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