AIB is in ‘good shape’ for IPO despite market volatility

AIB remains in "good shape" for an IPO of its shares this year in spite of the recent global stock market rout, the bank's chief executive Bernard Byrne has said.

“We’ve carried out a couple of roadshows in New York and London already this year and the appetite is still very strong for the Irish [recovery] story and for the AIB story,” Mr Byrne said, in an exclusive interview with The Irish Times.

He said AIB is seen by investors as a good “proxy” for the Irish economic recovery.

“That’s the most important piece. That appetite is still there and people will be looking to deploy capital to those sort of issues.”

Trillions of dollars have been wiped from the value of shares across the world in the first two weeks of trading this year amid concerns about the pace of economic growth in China, and falling commodity prices.

Market loses €3bn

Some €3 billion was wiped from shares traded on the Iseq Overall Index in Dublin on Thursday.

Bank of Ireland’s shares fell by 3.4 per cent, reducing its market cap by €355 million.

Mr Byrne said AIB’s investor relations team has met more than 20 potential investors over this time.

“We’ll make sure we keep our finger on the pulse in terms of investor appetite,” he said, adding the timing of an IPO was ultimately a matter for the Government as the State owns 99.8 per cent of the institution.

“Obviously if in four months’ time we’re still dealing with the same amount of [market] uncertainty then that’s a different issue, but I don’t think that’s going to be the case, personally.

“We’re still in good shape for having the ability to have a sale of the Government share this year.”

Last month, Minister for Finance Michael Noonan said he would IPO 25 per cent of AIB's shares this year if he were reappointed to the department following the general election.

Mr Noonan said his preference was to list the shares in the autumn on the main market in London but there was also a potential IPO window in the spring.

The sale of this stake could net the State about €3 billion, based on the National Treasury Management Agency’s current valuation.

No date for the election has been set although many commentators expect it to take place at the end of February.

AIB is due to publish its full year 2015 financial results on March 3rd. “We are ready to launch,” Mr Byrne said, adding the re-election of the current administration would provide some certainty to the bank on the IPO issue.

Next government

“For continuity, we have been working with a certain administration and they have a very clear view. Obviously, we are well-positioned to deliver against that view.

“Were the Minister to be re-elected or that general environment to survive, then clearly you have a set of people you are aware of and know what’s going to happen. That’s good for us.

“If anyone else were to come into power, it depends on what their disposition is.

“It’s inevitably going to take slightly longer because they are either going to have to understand it and form their own view, or they might have a different view.”

Sinn Féin has already indicated it won’t sell a stake in AIB if it is part of the next government.

“I can’t influence what a particular policy or position might be,” Mr Byrne said.

“The only comment to make is that whoever is in power, they will have still an objective to reduce, in a meaningful way, the national debt.

“And probably the way you can do that most readily is the disposal of the most marketable asset that exists and the one that actually isn’t really necessary to own from a policy intervention point of view . . .”