Wilbur Ross to sell entire Bank of Ireland shareholding

Tuesday 10 June 2014 07.11
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Wilbur Ross currently holds 5.54% of Bank of Ireland's shares
Wilbur Ross currently holds 5.54% of Bank of Ireland's shares
Wilbur Ross says sale of stake is not a negative comment on Bank of Ireland or Ireland
Wilbur Ross says sale of stake is not a negative comment on Bank of Ireland or Ireland

US investor Wilbur Ross is to sell his entire holding of around 1.8 billion shares in the Bank of Ireland, Deutsche Bank has said.

Two sources familiar with the matter said the sale would be priced at between 26 cent and 27.5 cent per share.

Deutsche Bank is acting as sole book-runner on the placement, which one of the sources said comes at a discount of between 3.2-8.5% to Monday's closing share price.

Mr Ross currently holds 5.54% of the bank's shares.

He was one of a number of international investors to buy into the bank in 2011, initially taking a 9.1% stake when the share price stood at around 10 cent.

'Not a negative comment'

Mr Ross said he believes the bank is "on the right track".

This is "definitely not a negative comment on BoI or Ireland. Both are clearly on the right track," Mr Ross said in an emailed message after Deutsche Bank announced it was to sell his stake.

"Some of our other holdings have trading restrictions so this was the logical choice," he said.

Fellow shareholder Fairfax Financial  "was aware of the trade but did not participate in it," he said.

Mr Ross said an EU rule that prohibits bank board members from serving on more than three other boards was also a factor.

Ross set to double money

Sources have indicated Mr Ross will more than double his money.

Mr Ross, whose fund specialises in distressed assets, was among a group of North American investors who bought a 35% stake only months after Ireland signed up to the EU/IMF bailout.

He cut his stake in March to 5.5% from around 9%.

The Government remains the largest shareholder with 14%.

Deutsche Bank is acting as sole bookrunner 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 cents each, compared with the 10 cents the bank was trading at when Ross bought the stake.

That would price the holding at between €468m and €495m.

Bank of Ireland's share price closed at 28.4 cent, down from a peak of 39 cents earlier this year.

Bank of Ireland 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 resigns from board

Mr Ross has also resigned his position as a director of Bank of Ireland.

In a statement the bank said: "Bank of Ireland has been notified by Mr Wilbur L Ross, Jr of his resignation as a director of Bank of Ireland and the agreement by Mr Ross and certain funds connected with him to sell their remaining shares of c. 1.8 billion units in Bank of Ireland.

"The bank notes, appreciates and understands the comments which Mr Ross has separately made this evening to the media and wire services regarding the rationale for the share placing and his resignation from the board." 

Bank of Ireland Group Chairman Archie G Kane said: "On behalf of the board I would like to thank Wilbur for his contribution, diligence and commitment as a board member.

"Wilbur was instrumental in the success of the 2011 capital raising and, throughout his tenure, we have benefited greatly from his insights."

Department of Finance issues statement

In a statement, the Department of Finance said that Mr Ross invested in Ireland at a time when the country's international reputation was at its lowest point.

"Slowly but surely that reputation has been rebuilt and Mr Ross's investment has been followed with billion of euros more investment from others into Ireland; particularly in the last 12 months", the statement added.

The Department also said that Ireland is at a completely different place now than when Mr Ross first invested, expressing confidence that similar international investments will continue.