Up to 110 of the most senior staff at Davy Stockbrokers have taken an equity stake in the business following the €316.55 million management buyout of the company from Bank of Ireland.

The deal closed yesterday following approval from the Financial Regulator. The transaction put an equity value of €350 million on the broker, in which the bank has had an involvement since 1988. Davy ranks among the very biggest players in the Irish financial scene and claims responsibility for 70 per cent of the funds raised on the Irish stock exhange in recent years.

The completion of the buy-out greatly increases the likelihood that managers at Davy's arch-rival Goodbody Stockbrokers will buy equity in their firm from AIB. Recent talks centred on an arrangement to transfer a 30 per cent interest in Goodbody to its management.

Davy management and staff paid an upfront cash consideration of €316.55 million for 90.444 per cent stake in the business that the bank held.

The remaining shares were closely held by Davy managers, including chief executive Tony Garry, director Kyran McLaughlin and chairman Brian Davy, whose father James Davy was a co-founder of the business in 1926. In contrast to their small equity position, they enjoyed a majority of the voting rights on the company's board.

The net profit for Bank of Ireland will be in the region of €225 million when transaction costs and the reduction in the bank's net assets are taken into account. The tax impact on the bank is said to be negligible. Davy had gross assets of €649 million at the end of 2005. The broker is understood to have made a pretax profit of some €40 million in the year to March, valuing the transaction 8.75 times profit. The deal had been notified to the market some weeks ago. Shares in Bank of Ireland closed last night at €15.70, nine cent weaker on the day.

A Bank of Ireland spokeswoman said that the growth in profits in its other businesses meant there would no net loss of profit for the bank as a result of the deal. She said stockbroking was no longer seen as a growth area for the bank. In addition, she said divisions such as Bank of Ireland Private Banking and IBI Corporate Finance had been in competition with Davy's private clients and corporate finance units for some business.

The highly leveraged deal was backed with debt finance from Anglo Irish Bank. While the extent to which the top management group in Davy increased their equity position was unclear last night, the deal was specifically designed to enable the broker's most valued staff to take shares in the company.

Mr Garry said that 20-25 per cent of the broker's 460 staff had taken shares in the business. He would not reveal the management stake and said no list had of shareholders had been published internally. Some of the staff shareholders funded their part in the deal from their own resources and others took out debt, he said. "There's a new generation coming through and they have a desire to own the business they work in."

Given the creation of significant "dynamic wealth" in the boom years, Davy saw opportunities to grow the private client side of its business. Large-scale initial public offering work was scarce, he said. However, the broker saw opportunities to further its involvement on the IEX exchange for developing companies.