By Padraic Halpin and Laura Noonan
DUBLIN/LONDON (Reuters) - Two of Bank of Ireland's largest shareholders, who helped keep it out of state hands at the height of the euro zone debt crisis in 2011, stand to more than triple their money when they sell back a part of their stake on Tuesday.
Wilbur Ross and Fairfax Financial received sufficient bids to sell a combined 6.4 percent stake on Tuesday, the only stock Fairfax says it plans to offload.
Billionaire investor Ross and Fairfax boss Prem Watsa were among a group of North American investors who bought a 35 percent stake only months after Ireland signed up to an EU/IMF bailout.
The pair, who own almost 18 percent of the bank between them, were selling at a guided price of around 0.33 euros, a discount of up to 10 percent on Monday's closing share price, a source familiar with the transaction said.
The bookbuilding was covered by 1145 GMT, the source added, and was due to close at around 1400 GMT, a second source said.
The price would represent a hefty increase on the 10 cents the group of investors, which also included Kennedy Wilson, the Capital Group and Fidelity Investments, paid for their holding.
"Bank of Ireland has been one of our most successful investments," Watsa told Reuters in an interview.
"Because of the significant appreciation, we are rebalancing our position. The position had become very significant (in terms of our overall portfolio).
"We remain strong supporters of (chief executive) Richie Boucher and Bank of Ireland... Bank of Ireland will benefit from the ongoing recovery of Ireland and we have no intention to sell any more of our stake. We are long term investors."
Ross owned more than 2.9 billion Bank of Ireland shares, or 9.1 percent of the bank, before Tuesday's announcement. Fairfax held 2.8 billion shares, or 8.7 percent.
GOVERNMENT STRATEGY UNCHANGED
Bank of Ireland shares fell 7 percent on Monday after its full-year results, having risen by 25 percent to a high of 0.39 euros in the month before publication. Shares were down 7.8 percent at 0.33 euros by 1348 GMT on Tuesday.
The 14-percent state-owned bank said it returned to profit in the first two months of the year and cut its full-year loss by almost two thirds in 2013 thanks to improved margins and a fall in the number of homeowners in arrears.
Fairfax has since gone on to invest in Greece, announcing an increase in its stake in property company Eurobank Properties in October, while Ross told Reuters last year that he was keen on financial assets in Spain, another distressed euro zone market.
Deutsche Bank, the placing's bookrunner, said the accelerated bookbuilding of the 2.1 billion euros of shares on offer was open to institutional investors only and that Ross and Fairfax had agreed not to sell any more shares for 90 days.
The pair were the second and third-largest shareholders in the bank behind the government, which also holds more than 99 percent of rival lenders Allied Irish Banks and permanent tsb .
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.
"I'd be surprised to see the government announce imminent plans to divest its residual Bank of Ireland equity stake," Merrion Stockbrokers analyst Ciaran Callaghan said.
"Given the (state's) strong cash buffers, the state is not under any pressure to monetize its investment. I would expect them to weigh up the market's reaction to the North American disposal before forming any concrete plans."
A spokesman for the finance ministry on Tuesday said that its strategy remained unchanged and the government would reduce its shareholdings in the banks at the right time.
($1 = 0.7260 euros)
(Additional reporting by Freya Berry in London; Editing by Mike Collett-White)
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- Bank of Ireland
- Deutsche Bank
- Wilbur Ross
- Fairfax Financial