How two billionaires made huge killing on BoI shares
TWO billionaire investors have pulled
off the deal of the century after tripling their money following an audacious
bet ( IN QUINN CASE THEY SAID RECKLESS GAMBLING) on Bank of Ireland shares.
US-based Wilbur Ross and Canada's
Prem Watsa slashed their stake in the Irish bank by a third yesterday, selling
a 6.4pc holding for around €690m.
It's more than the €600m the pair paid
for three times that size of shareholding in 2011 – and leaves them with a 12pc
stake in Bank of Ireland that is worth a cool
€1.2bn based on yesterday's trading price.
Shares bought for 10 cents each in 2011
were sold for just under 33 cents in yesterday's deal.
The huge windfall for the investors is
likely to spark debate about whether the Government here allowed Bank of
Ireland to be sold too cheap in 2011.
Seeing successful investors cut their
stake will also prompt speculation that the time may be ripe for Finance
Minister Michael Noonan to sell some of the
taxpayers' 14pc stake in the bank – which has also tripled in value since 2011.
Yesterday's deal came about after
"an inbound inquiry" from Deutsche Bank, not because he was looking to
sell, US-based Wilbur Ross told the Irish Independent.
"We simply responded to an inbound
inquiry from Deutsche Bank. We are happy to retain about two-thirds of our
shares and have no present intention to sell any more," Mr Ross said.
He is "totally supportive" of
the bank's strategy and tactics and will continue to be active on the board, he
said.
Deutsche Bank sold the stake on to
so-called "institutional investors", the kind of pension funds and
insurance companies once seen as natural bank investors.
"Bank of Ireland has been one of
our most successful investments," Prem Watsa said yesterday.
Mr Ross has been a director of Bank of
Ireland since June 2012. Before yesterday's deal he was the biggest private
sector shareholder in Bank of Ireland, owning around 9pc of the bank.
'Forbes Magazine' estimates Wilbur Ross' wealth
at €2bn.
Lower profile Prem Watsa is though to
be worth even more. His Fairfax Financial owned a slightly smaller stake and is
the bank's second biggest shareholder. At one stage he was also a director of
the bank, but since last year he has been represented on the bank board by non
executive director Bradley Martin.
In 2011 the duo were part of a
five-strong group of North American investors who spent €1.1bn buying 35pc of
Bank of Ireland in what was seen as one of the most daring transactions ever.
STAKE
Other investors were Fidelity, the
Capital Group and Kennedy Wilson, which took a smaller stake than the others
but is credited with putting the whole thing together. Kennedy Wilson is
understood to have already sold its Bank of Ireland stake.
The 2011 deal was done at the height of
the financial crisis, just months after Ireland was forced into the EU/IMF bailout. At the time, fears for the
future of the euro were running high, and most investors were pulling out of
Ireland – including on concerns as yet undiscovered financial holes lurked on
the balance sheets of all the main banks.
Fairfax said yesterday that it has no
plans to cuts its stake further. Its decision to sell shares was driven in part
because the Bank of Ireland shares are now worth so much that the investor
needed to "rebalance" its portfolio.
BoI shares tumbled 10pc yesterday.
Yesterday chief executive Richie
Boucher said the bank had returned to profit in the first two months of the
year.
Irish Independent
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