LONDON/DUBLIN U.S. billionaire Wilbur Ross sold his entire shareholding in Bank of Ireland for almost half a billion euros on Tuesday, to almost triple the value of a shrewd investment made at the height of the euro zone crisis.
Ross has said he would sell his 5.5 percent stake three years after his pioneering investment kept the struggling bank out of state hands, and his holding was snapped up at 0.265 euros a share.
The 76-year-old investor, who made his name by snapping up out-of-favour assets ranging from banks to textile firms, joins several big investors who timed their bets to make significant profits from stepping in to bail out European banks.
"This has been a terrific investment for us," Ross told Reuters in response to emailed questions, adding that even though he remained confident in the bank and in Ireland's prospects, he had become too concentrated in banking.
Ross, whose fund specialises in so-called distressed assets, was among a group of North American investors who bought a 35 percent stake months after Ireland signed up to an EU/IMF bailout, effectively giving an early vote of confidence in the debt-ravaged country.
He told Reuters in April he was assessing distressed assets in Greece, Spain, Portugal and Italy and was looking to make investments in the next few months.
Tuesday's placing in Bank of Ireland was priced at a 6.7 percent discount to the stock's closing price of 0.28 euros on Monday, valuing the holding at 477 million euros ($649 million). By 1100 GMT Bank of Ireland shares were down 3.2 percent.
A source familiar with the matter said Ross's 1.8 billion shares had been bought by a mixture of existing shareholders and other investors. Deutsche Bank acted as sole bookrunner.
Ross, who had a stake of about 9 percent before first selling shares in the bank in March, sold that initial stake at just below 0.33 euros per share, meaning he almost tripled his investment having bought when the shares were trading at 0.10 euros.
BET ON RECOVERY
Through an investment in Virgin Money, Ross also got into British banks, a sector where others have succeeded. Investors from Qatar and Abu Dhabi made more than 1 billion pounds each on bets on Barclays BARC.L when the bank needed cash in 2008.
He was also one of many international investors - from tycoon Donald Trump to investment firms such as Lone Star and Franklin Templeton - who bet on Ireland's recovery by buying up everything from bonds to hotels and apartment blocks after a devastating economic and banking crisis.
Liquidators appointed to the collapsed Anglo Irish Bank, who in recent months sold loans with a book value of 21.7 billion euros, said last week the disposal was the biggest loan sale in the world in the past two years.
Fairfax Financial boss Prem Watsa, who was also part of the 2011 consortium and who sold shares with Ross in March, told Reuters on Monday Ross's decision was "entirely unrelated to the business" and pledged to hold his own 5.8 percent stake for the long term.
The Irish government, the bank's largest shareholder with 14 percent, has said it has no interest in running banks long term but is under no financial or political pressure to sell.
Bank of Ireland, the only Irish lender to avoid full state ownership, said in March it had been profitable in the first few months of the year and analysts say it is well placed to pass European "stress tests" on the sector this year.
"Longer term, the removal of Wilbur Ross from BoI's share register may be a positive for the bank, reducing the focus and reliance of one large high-profile investor as the group returns to normalised operating conditions," Merrion Stockbrokers analyst Ciaran Callaghan wrote in a note.
"However, more short term, his sudden departure is likely to raise questions over the future upside to the bank's equity valuation and the challenges that remain ahead, despite its recent return to profitability and capital generation."
(Additional reporting by Steve Slater in London; Editing by David Goodman and David Hmolmes)