Six things tax payers should know about AIB's IPO

The State has a 99.9% stake in the bank...

White smoke on AIB's IPO is expected in the coming days and it is set to be both one of the largest flotations in London this year, and one of the most significant events in Irish business in 2017.

With the bank effectively being state-owned and opportunities for private investors to get involved, there's plenty to get your head around ahead of the flotation.

1. What's happening and why?

When the state bailout of Irish banks during the crash went down, AIB was particularly exposed. Ireland pumped €29.5bn into AIB, Bank of Ireland and Permanent TSB, and took on a 99.9% stake in AIB.

Now that the bank is back on its feet, profitable, and showing strong growth prospects, the State is offloading 25% of this stake by floating it.

This move has been long-heralded. Before the last general election, Fine Gael said it was ready to proceed with the IPO once the market conditions were suitable. After Brexit jitters, Trump's US presidential victory, and fears surrounding general elections in the Netherlands and France, conditions are now relatively calm heading into the summer months.

2. When will this happen?

An announcement is expected in the coming days - even Finance Minister Michael Noonan's decision to step away from his position once Fine Gael's new leader is chosen will not delay the process.

The Department has been offering contracts to firms to assist with the IPO over the past few months and it's nearly go-time.

3. What happens once it's happening?

The bank's first move will be the publication of an intention to float notice. That is likely to include the date for the flotation.

Two weeks later, the detailed IPO prospectus will come out. This will include an indicative share price.

5. Can I invest?

While these shares will be aimed at institutional investors such as large banks and pension funds who want a long term investment, a proportion is also set to be made available to individual retail investors. The minimum buy-in is expected to be €10,000.

Potential investors must be registered with a stockbroker and retail investors will be putting their money forward at the highest indicated price per share listed in the prospectus - even though it is not guaranteed to reach that price.

When the flotation comes, these investors are not guaranteed to get all of the shares that they've requested.

6. How do the bank's financial prospects look?

AIB registered a €1.7bn profit before tax for 2016 - and announced plans to pay a €250m dividend to the State.

Its new lending in Ireland increased by 16% as loans of €12.9bn were approved.

The bank also had a 39% share of new lending drawdowns in the final quarter of 2016 - suggesting it is on course to attract more business as demand for new mortgages remains strong and more properties come onto the market in the coming years.