Abbey National sells its 9 per cent shareholding in Irish Permanent

The British financial services group Abbey National has sold its 9 per cent shareholding in Irish Permanent, realising a £60.7 million (77 million) profit on its investment. The shares were taken up by Irish and overseas investment institutions when they were placed in the Dublin market yesterday.

AIB Investment Managers purchased 2.7 million Irish Permanent shares to take a 3 per cent stake in the company. The British investment fund Perpetual bought a further 2.1 million shares, equal to 2.2 per cent of the company's total equity and Standard Life also raised its stake, from just below 5 per cent to 5.1 per cent.

Around half of the total share placing was taken up by the British investment house Moore Securities. It purchased four million shares, bringing its stake to almost 4 per cent.

Abbey National sold its shares for £9.75 sterling (13.82) each, having bought them at around £2.32 (3.28) per share when Irish Permanent floated in 1994. The British group paid £17 million (#24.1 million) for its 9 per cent stake at that time, viewing it as a strategic investment in preparation for a full bid for Irish Permanent after its takeover protection is relaxed next year.

Last year, however, Abbey National chief executive Mr Ian Harvey firmly ruled out any such takeover, stating that the group did not have any ambitions to enter the Irish market. Since then, Irish Permanent has announced its merger with Irish Life, which would have reduced Abbey National's stake in the enlarged entity to around 3 per cent.

Commenting on the sale yesterday, a spokesman said Abbey National had decided to sell its Irish Permanent shares now because it had got a very good price for them.

"It was always an investment. An entry into the Irish market through our strategic interest in Irish Permanent was never our plan," he said.

Irish Permanent's general manager of strategic development, Mr Diarmuid Bradley, said he was not surprised by Abbey National's decision and was pleased that a number of new institutions had now invested in the company. The shares were placed by AIB's stockbroking arm, Goodbody. Abbey National has operations in Northern Ireland and has a presence in the Republic through its subsidiary, Scottish Mutual International. It employs 60 people, mainly selling offshore unit trust investment products. Last year, it wrote business worth £63 million (79.99 million) in the Republic.

Its exit from Irish Permanent is unlikely to have any impact on shareholders. The huge appetite for the shares from the investment institutions reflects the broadly positive response in the markets to the merger. It is also driven by the introduction of the euro as overseas investors rebalance their portfolios to include stocks in the euro zone.

The merged Irish Life & Permanent will be the fifth-largest Irish stock in the European indices.