New IPO

The Irish government’s sale of part of its stake in Allied Irish Banks Plc came a step closer last week. On Thursday in Dublin, the finance ministry appointed another group of banks to help in what could be the biggest listing on the London and Irish stock exchanges this year.

How much of AIB will be sold?

The government hopes to recoup about 3 billion euros ($3.3 billion) or more from selling 25 percent of AIB, which had to be rescued by the state during the financial crisis. Including the so-called greenshoe, about 27 percent of the lender could be sold. The government owns 99.9 percent of the bank, and Finance Minister Michael Noonan has said it may take a decade to return the bank fully to private hands.

When is the IPO going to happen?

Noonan has indicated the sale could take place in May or June. If that’s delayed, the next window is probably in the fall. Noonan has consistently said the determining factor will be maximizing value from the sale, and the state of the wider market will play a key role. The Bloomberg Europe Banks and Financial Services Index has risen 28 percent over the last six months. That rally has stalled in recent weeks, and privately, government officials insist they won’t be rushed into a sale.

What is AIB worth?

The agency that manages the government’s shareholding, the Irish Strategic Investment Fund, valued AIB at 11.3 billion euros in February. That was before the bank released its 2016 results, including a pretax profit of 1.7 billion euros and a reinstated dividend, and government officials view the February valuation as low.

How will the sale be priced?

A tiny sliver of AIB’s shares is still traded on the junior Dublin market. These are so thinly traded, they aren’t considered a particularly useful measure of the bank’s value. As ever, the price will be determined by demand, and early soundings indicate demand will be strong. AIB is viewed as a proxy for the Irish economy, which is growing at twice the pace of the euro-region. The bank is the biggest player in the Irish mortgage market, with about 35 percent of new lending. A valuation of about 12 billion euros would suggest a price of around 4.50 euros per share.

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd

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IPO ? Think Again

The latest IPO of the next big thing — Snapchat — is not looking so good. True to form, the Wall Street investment banking machine and the financial media hypesters at CNBC whipped the crowd into enough of a frenzy that the stock popped nicely in its first two days of trading.

The stock “went public” at $17 a share. But of course, it was never really available at $17. That’s not how this works. Sure, big important clients at some investment banks might’ve gotten it at $17, but you and me? Yeah, right. Again, that’s not how it works. Individual investors are third on the food chain, maybe fourth…

First there are the venture capitalist guys that buy into hot new companies in the early stages. Then there are the investment banks that come in with some investment capital in order to ensure a piece of the action when IPO day rolls around. Then there are the favored clients that get the cheap shares of the actual offering — which were $17 for SNAP. Then, after all those players get their piece, those shares hit the market.

It’s basically payola, all the way down to when the shares are actually available on the Nasdaq or New York Stock Exchange. Which means when you buy an IPO, you’re paying the favored clientele their profit. You’re paying the investment banks. And you’re paying the venture capitalists. And you’re paying the company insiders…

They are all selling — and you’re buying.

In this case, it probably won’t help you to know that SNAP founder Evan Spiegel is now a 26-year-old who’s worth over $5 billion.

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd