European and US hedge funds are strongly represented among the institutions that have subscribed for shares in Aer Lingus. It is understood that US-based SAC Capital Advisors is among the funds which have placed firm orders.
Aer Lingus chief executive Dermot Mannion and the airline's chief financial adviser Greg O'Sullivan were last night concluding their US investment roadshow in New York. The recent softening of jet fuel prices has made Aer Lingus more attractive to an additional group of investors.
Several hedge funds are understood to have shown an appetite for the shares. At one point hedge funds were a major component of those subscribing, but this has reduced as other institutional investors register their interest.
While the investment roadshow moved to New York late this week, several large hedge funds with offices and personnel in London have been attending meetings with Aer Lingus management during the last fortnight.
Those involved in the IPO declined to comment publicly yesterday but said it was common for hedge funds to register ahead of institutional buyers. If the offer is oversubscribed, it is possible the institutional investors will get preference over the hedge funds. "The book building process continues and it is still very fluid," said one source.
It is understood several hedge funds have made enquiries about the airline's shares, among them SAC, Och-Ziff and Bridgewater Associates.
The co-ordinators of the offer are obliged to ensure that 50 per cent of the shares are held in Irish hands as the company floats. This is an obligation under aviation agreements.
Institutions have until 5pm on Tuesday to make final offers for shares in the airline.
Once the deadline has passed, the promoters of the offer will strike a final IPO price.
Sources at this stage suggest this could be in the range of €2.35-€2.45.
On Wednesday, an offer price announcement will be made containing the price at which the shares will be floated and the number of shares on offer.
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