A 7 per cent stake in Eircom has been returned to the original venture capital investors in the company, including Providence Equity Partners and Soros Private Equity.

The 52 million shares, or 7 per cent of the company, are now subject to a lock-in period of 180 days, preventing their sale until October at the earliest.

There have been concerns in the market that if the shares reverted back to the venture capital companies, who would not be seen as long-term holders of the stock, it could act as a brake on the share price.

However, many investors are currently attracted to Eircom for its dividend yield, which may make the "overhang" of stock less of an issue.

Shares in Eircom closed just one cent lower last night at €1.48, making the stake worth about €77 million at current prices.

The 7 per cent stake had been held by Morgan Stanley to ensure a stable market in the shares in the weeks immediately after its March flotation.

Known as the over-allotment, or "greenshoe", Morgan Stanley was given the shares "to meet over-allocations, if any, in connection with the global offer and to cover short positions resulting from stabilisation transactions".

The broker could have sold these shares into the market at a profit if the share price had risen above its flotation price of $1.55, which it did not.

Under the terms of the underwriting agreement, if Morgan Stanley did not sell the shares within 30 days of the flotation, they reverted to the sellers, along with Goldman Sachs, who are prevented from selling for 180 days.