February 16, 2011
By Staff Reporter
By Andrew Bushe
DUBLIN – The number of Irish shareholders has increased fourfold in the last seven years, according to a new study, but that figure is expected to soar dramatically again as a result of the Telecom Eireann flotation.
Goodbody Stockbrokers estimate that 380,000 people, or 13 percent of the population, now own shares.
Driving the increase are higher incomes, greater wealth, low interest rate returns, the conversion of financial companies and agricultural co-ops, and profit-sharing deals for workers.
About 38 percent hold shares in just one company and the ownership is split 56:44 percent male to female.
More than 540,000 got shares as a result of the demutualization of Irish Permanent, First Active and Norwich Union. People who held onto their shares after these three conversions alone are now equivalent to half the shareholders.
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Ireland is still well behind many countries in the share-owning stakes, but the flotation of Telecom, the Irish telephone company, and other planned privatizations by the government will change that.
The 1.17 million people who registered an interest in buying Telecom shares will be given details about the sale when the prospectus is issued at a special launch on Sunday, June 13.
This will reveal crucial details about just how much of the company the government is selling, application details and the share-out of the float between ordinary buyers and the institutional investors.
The government owns 50.1 percent of Telecom and have indicated it will sell a minimum 20 percent. The huge response to the registration may mean that up to 45 percent will be put on the market.
Government sources indicated that the minimum share application will be £250. Enterprise Minister Mary O’Rourke had wanted to keep the figure as low as possible, but it is felt that if it were any lower, much of return on the investment would be eroded by fees.
It is understood a maximum of £100,000 is being considered, but, with the issue expected to be oversubscribed, the number of shares granted could be scaled back.
The cabinet subcommittee considering the flotation has decided to build in a loyalty bonus that should effectively give a 4 percent return in the first year.
Investors will get one free share for every 25 they are granted, provided they hold onto the stock for a year.
This will help stabilize the stock and minimize "stagging," or selling for a quick profit straight away after Telecom is quoted in New York, London and Dublin next month.