Cantillon: Chance to gain from Bank of Ireland

The fact that Wilbur Ross and his fellow investors have seen the value of their investment in Bank of Ireland triple  since 2011 is both a cause for celebration but also reflection.

It is another milestone of Ireland’s journey from pariah to normality. The price paid by incoming investors this week is a reflection of the fact that many of the apparently insurmountable problems of 2011 have been surmounted. The State is back in the bond markets and the economy is healing fast.

It is right that Mr Ross and his fellow investors were rewarded for the undoubted risk they took in 2011, but that does not mean we should not ask questions as to whether or not the Government sold too cheaply and whether or not the rewards were truly warranted.

Viewed from the calmer waters of 2014, selling one third of the largest bank in Ireland for €1 billion was something of a giveaway. Even at the time it was clear that the Government was prepared to take a hit on Bank of Ireland in order to avoid having to nationalise the entire banking system and further damage what was left of our reputation. It was also desperate to get some investors with international credibility such as Ross and Prem Watsa's Fairfax Financialto buy into an Irish recovery story.

The true cost or benefit of the deal done in 2011 is impossible to calculate and trying to do so is pointless in many ways. But what is important is making sure that the maximum value is returned to the taxpayer from the eventual sale of the remainder of the Government's stake in Bank of Ireland and also when the time comes, AIB.

The chief executive of the latter institution set out a putative timetable for this process yesterday and no doubt the pressure will build for some sort of transaction over the coming months. The Government must be patient and remember that thankfully 2014 is not 2011. Having taken the pain, the taxpayer deserves the maximum gain, even if it requires them to wait.

Vodafone investors go postal over delays
If a company were to actively look to enrage its shareholders, it could scarcely have done a better job than Vodafone and its share registrar, Computershare, have managed in the past month.

It looked a relatively straightforward exercise. A total of $84 billion (€61 billion) coming back to shareholders in cash and Verizon shares following Vodafone’s $130 billion sale of its US business to Verizon. While Irish shareholders, most still nursing losses on their original Telecom Éireann investment, might not have been as effusive in their appreciation of its generosity as analysts and shareholders elsewhere, it was welcome nonetheless.

But then it started to go badly wrong. Not all of it was the fault of Vodafone and Computershare. They posted out documents relating to the deal together with easy-to-read guides on how to proceed and the necessary forms in December. Many people simply dumped the envelopes as they would have done with many previous mailings from the group.

However, not all did. Many never got them, for whatever reason. And when they rang up Computershare to check or amend addresses and have them resent, those instructions appear not to have been followed in a number of cases.

It got worse. Mail between the Republic and Britain takes a maximum of five working days, according to the Royal Mail (An Post says it is usually closer to two - three days). Yet people who sent forms back as much as five weeks ahead of deadline were told they had missed out on the chance of exercising a tax-efficient option on the payout.

Computershare tried to deflect blame on the postal services but both An Post and Royal Mail confirmed there were no particular problems hindering services at the relevant times. Shareholders argue Computershare was unprepared for the wave of mail close to deadline from Vodafone’s band of Irish shareholders.

Despite the presence of those 380,000 Irish shareholders, Computershare appears not to have considered using its Dublin office as a conduit for forms.

It didn’t help that letters telling people they had missed the deadline arrived at from Comptershare in Bristol within two days. And that letters with payment of cash entitlements started arriving yesterday, just one day after posting – from Computershare’s Dublin office!

What a shambles.

Only one bum note at €6.8bn fund launch
There was only one bum note, or what sounded like a bum note, at yesterday's event in Dublin Castle hosted by the National Treasury Management Agency.

When questions were invited from the audience about the new €6.8 billion Ireland Strategic Investment Fund (ISIF), Tom Parlon, of the Construction Industry Federation, was the first with his hands up.

He made a number of critical observations about public-private partnerships, saying they were cumbersome and involved excessive legal costs.

John Corrigan (right), chief executive of the NTMA, said he did not accept all of Parlon’s criticisms. The NTMA is involved in the building of schools by way of PPPs, and, Corrigan said, it was replacing schools that had been built only 25 years ago. You wouldn’t be expecting to knock down your house after just 25 years, he said.

It sounded like a dig given it was being said to the representative of the Irish construction sector, though later, when talking with reporters, Corrigan said the PPP process involved PPP companies maintaining the schools over a 25-year period. Non-PPP schools are the responsibility of their local managers, who are often strapped for cash, and it may be the shortage of funds for maintaining such schools that explains why some are “falling down”.

Mostly the tone was positive, and the focus was on investments and growing the Irish economy. Minister for Finance Michael Noonan, in his address, said a lot of economic indicators were pointing in the right direction, but unemployment was still too high.

The ISIF was one of three prongs to the Government’s strategy for funding growth, the others being repairing the banking system and encouraging non-bank funding of business.

Representatives of Bluebay, Carlyle Cardinal, AMP Capital, Better Capital, Silicon Valley Bank and Atlantic Bridge were there to talk about their involvement with the new fund and their plans for investing hundreds of millions of euro in Irish business.