AIB shares closed with gains in conditional Dublin trade today after the State sold a near 29% stake of the bank at a price of €4.40 per share.

The Government had said it would sell a minimum 25% stake in AIB but then sold an additional 3.7% as part of its flotation of the bank. 

The development will raise an additional an additional €400m, which will bring the total proceeds of the IPO to €3.4 billion.

While the initial €3 billion will be paid to the State on Tuesday, the additional €400m will be held by Deutsche Bank which is advising the State on the flotation.  

The €400m can be used to support the share price in the event that it falls in the coming weeks. 

However, if the flotation proceeds smoothly the full €400m will be returned to the Government in the next month. 

AIB's shares began trading on the Dublin and London Stock Exchanges at 8am this morning and gained as much as 7% in early trade.

The sale is the biggest flotation in Europe this year, and the share offer was four times oversubscribed. 

350 financial institutions bought shares, with 10% of shares for sale allocated to ordinary investors. 

A total of 678,595,310 ordinary shares were sold in today's IPO. 

The department said that based on today's offer price, AIB's market capitalisation is approximately €12 billion.

Minister for Finance Paschal Donohoe has described the flotation as a milestone in the recovery of money which was invested in banks.  

"The offer was very well received and attracted high demand from investors everywhere it was marketed, reflecting the strength of AIB's investment story and prospects, and the attractions of Ireland's vibrant and growing economy," the minister said. 

"This successful IPO has created a strong platform for the State to recover all the money it has invested in AIB and to further dispose of our banking investments for the benefit of the Irish people," he added.

The share price of €4.40 was the mid point in a price range announced last week. 

AIB chief executive Bernard Byrne said today was a landmark day for the bank and puts the total cash paid to the State since its bailout to almost €10 billion.

"The level of investor interest and support for AIB and Ireland is a great vote of confidence in the strength of the turnaround in the bank and the wider economy. It paves the way for the full recovery of the investment in AIB, over time, as we return to full private ownership," he added.

AIB also said that the less than 0.1% of its shares which were listed on Dublin's ESM market will be delisted this morning. 

The Government is set to use the funds raised in today's IPO to cut some 1.5% from its national debt of €200 billion, which is still among the highest in the euro zone.

Fianna Fáil's Finance Spokesman welcomed the flotation, saying the signs were good that the State would recoup most of its investment which it made in the bank.

Speaking in Cork, Michael McGrath cautioned against the Government rushing into selling more AIB or other banking shares in the short-term.

"It is our view that the State should hold a majority shareholding in AIB for the foreseeable future," he stated. 

He also said the public deserve clarity on where any future money from the sale of shares will go to and he warned about the prospect of vulture funds getting hold of loan books.

Fitch says IPO a 'notable further step in the long recovery of Ireland's banking sector' 

Commenting on today's IPO, Fitch rating agency said the first stage of AIB's return to private ownership is a notable further step in the long recovery of Ireland's banking sector. 

Fitch noted that the privatisation was able to get underway thanks to AIB's "improving credit fundamentals", helped by falling unemployment, rising property prices and strong economic growth. 

It said the shift in ownership does not change AIB's credit fundamentals or ratings, but the Government's decision to start the sale process was due to the bank's improving financial profile, which this year enabled it to pay its first dividend since 2008. 

While AIB still has a high proportions of non-performing loans, low-yielding loans - including tracker mortgages - and defaulted but not impaired loans, it said it expects the bank's asset quality to continue improving in 2017.

This will  be "underpinned by a supportive operating environment, strong demand for Irish commercial property and the bank's proactive approach to reducing legacy assets," it added.

While off their earlier highs, shares in the bank closed at €4.65 this evening in Dublin.