U.S. billionaire Wilbur Ross is to sell his entire holding in Bank of Ireland three years after his investment kept the bank out of state hands, Deutsche Bank said on Monday, with sources indicating he would more than double his money.
Ross, whose fund specializes in distressed assets, was among a group of North American investors who bought a 35 per cent stake only months after Ireland signed up to an EU/IMF bailout.
He cut his stake in March to 5.5 per cent from around 9 per cent, while the government remains the largest shareholder with 14 per cent.
Deutsche Bank is acting as sole book runner on the placement of Ross’s 1.8 billion shares.
Two sources familiar with the matter said the shares will be priced at between 26 and 27.5 euro cents each, compared with the 10 cents the bank was trading at when Ross bought the stake. That would price the holding at between €468 and €495-million.
Bank of Ireland’s share price closed at 28.4 cent, down from a peak of 39 euro cents earlier this year.
Bank of Ireland declined to comment on the stake sale.
The bank said in March it had been profitable in the first few months of the year, achieving higher margins on new lending, although demand remained muted.
“At the heart of Wilbur Ross is a distressed investor. With the share price at 28 cents, Bank of Ireland is no longer a distressed play,” said Ciaran Callaghan, analyst at Merrion Stockbrokers.
“I don’t think it’s anything to do with losing confidence in Bank of Ireland or the management team. They should be fine for the European stress tests,” he said.
Ross in April told Reuters he was assessing distressed assets in southern Europe and was looking to make some investments in the next few months.
Ireland’s Finance Minister Michael Noonan told Reuters in December that while the government had no interest in running banks in the long term, it was under no financial or political pressure to sell.
One of the sources said the placement comes at a discount of between 3.2 and 8.5 per cent to Monday’s closing share price.
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