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Prem Watsa and Wilbur Ross Save Bank of Ireland

July 28, 2011 | About:
Prem Watsa, CEO and chairman of Fairfax Financial, has taken a lead stake in the beleaguered Bank of Ireland (IRE). Watsa got involved in the deal through Kennedy Wilson’s William McMorrow. McMorrow himself purchased Bank of Ireland’s real estate management arm a few months ago and told Watsa he’d been "very impressed" with Bank of Ireland’s management team.

Billionaire investor Wilbur Ross had previously made a bid for EBS, an Irish building society, which needed a large regulatory capital injection at the time. Watsa, McMorrow and Ross then set about finding other long-term value investors to embark on the Bank of Ireland project. This led to Fidelity and Capital joining the fray.

The five investors met with Bank of Ireland management a few weeks ago for due diligence reasons but the clincher for Watsa was Richie Boucher, Bank of Ireland’s CEO. Watsa sees the Bank of Ireland stake as a long-term investment based upon an appropriately capitalized bank to deal with stress tests.

Another attractive factor cited was the fact that the Irish government is working hard to secure both the economy and the banks. Ross states that Ireland’s economy will come back in time as there is a young, growing population, low corporate tax rates and a favorable trade balance.

The deal has saved the bank from nationalization and will see the Irish government's Bank of Ireland holding half to 15%. The total investment, from the consortium, was for a 34.9% stake in the bank with Watsa and Ross taking a 9% stake each. The price paid has not been disclosed.

Diclosure: None

About the author:

Stockbroker @ www.market-swings.com

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Rating: 3.7/5 (18 votes)


Yams4112 - 4 years ago
beautifully contrarian.
Fareastwarriors - 4 years ago
wilbur ross and prem watsa, that's an incredible team. + others. i'm sure they will do pretty well on this deal...

Paulwitt - 4 years ago
Paulwitt - 4 years ago
Full position in IRE. Starting a small position in NBG.

Kiko81780 - 4 years ago
Nice summary/snapshot.

Did they just buy common equity? No preferred stock or anything special?
Glenn5257 - 4 years ago

IRE investment by WL Ross & Co. It looks like WL Ross paid $447 million for 2.807 billion shares. After adjusting for the 1 for 10 spilt WL Ross has 280 million shares of IRE with a the same cost basis $447 million. It looks like WL Ross paid roughly $1.60/shr for his IRE shares. The shares were trading in the market at the time for $8+/shr. Who would do that deal?

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