U.S. billionaire Wilbur Ross to sell landmark Bank of Ireland investment

LONDON/DUBLIN Mon Jun 9, 2014 4:06pm EDT

Billionaire U.S. investor Wilbur Ross poses for a photo after an interview with Reuters on the sidelines of a conference at a hotel in Singapore September 25, 2012 file photo.  REUTERS/Tim Chong

Billionaire U.S. investor Wilbur Ross poses for a photo after an interview with Reuters on the sidelines of a conference at a hotel in Singapore September 25, 2012 file photo.

Credit: Reuters/Tim Chong

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LONDON/DUBLIN (Reuters) - U.S. billionaire Wilbur Ross will sell his entire holding in Bank of Ireland (BoI) (BKIR.I) three years after his pioneering investment kept the struggling bank out of state hands, but he said he remained confident about its prospects.

Ross, whose fund specialises in distressed assets, was among a group of North American investors who bought a 35 percent stake only months after Ireland signed up to an EU/IMF bailout in an early vote of confidence in the debt-ravaged country.

He is set to make a healthy profit on the deal, with two sources familiar with the matter saying the shares would be priced at between 26 and 27.5 euro cents each, compared with the 10 cents the bank was trading at when Ross bought the stake.

This is "definitely not a negative comment on BoI or Ireland... This has been a terrific investment for us and our investors," Ross told Reuters in response to emailed questions.

"With the continued appreciation of our bank holdings, we were getting so concentrated in banking that we had to cut back," he said.

In particular, he said European rules that limit the number of bank boards investors can sit on contributed to the decision.

Ross in April told Reuters he was assessing distressed assets in southern Europe and was looking to make some investments in the next few months.

WATSA KEEPING STAKE

Fellow investor Prem Watsa, who was also part of the 2011 consortium and who sold shares with Ross in March, said Ross's decision was "entirely unrelated to the business" and pledged to hold his own 5.8 percent stake for the long term. (FFH.TO)

"Bank of Ireland and Ireland generally are only beginning to see a return to their future potential," Watsa said.

The March sale, which included a ban on further share sales for 90 days, cut Ross's stake to 5.5 percent from around 9 percent. The Irish government remains the largest shareholder with 14 percent.

Ireland's Finance Minister Michael Noonan in December said that while the government had no interest in running banks long term, it was under no financial or political pressure to sell.

FREE FLOAT BOOST

The sale will increase the free float for the bank, which is one of the few large listed Irish companies that do most of their business in the domestic market.

Merrion Stockbrokers analyst Ciaran Callaghan said there was nothing in Bank of Ireland's recent performance to indicate it was running out of steam.

"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.

The bank 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.

Economists polled by Reuters last month forecast gross domestic product growth in Ireland of 2.1 percent in 2014, up from a 0.3 percent contraction last year, though unemployment in the first quarter fell by less than anticipated.

Deutsche Bank (DBKGn.DE) is acting as sole bookrunner on the placement of Ross's 1.8 billion shares.

One of two sources said the placement comes at a discount of between 3.2 and 8.5 percent to Monday's closing share price. That would price the holding at between 468 million and 495 million euros.

Ross said he did not initially plan to sell his whole stake, but was advised by an investment bank to avoid an overhang.

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

(Additional reporting by Padraic Halpin; Writing by Conor Humphries; Editing by Pravin Char and David Evans)

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