Irish Life has made a profit of £16 million through the sale of just under 70 per cent of its shares in Almanij, the holding company for the Belgian bank Kredietbank. The sale of 1,355,000 shares for £64 million was driven by portfolio management considerations and was not aimed at raising cash for other purposes, a spokesman said.
The shares were valued at £48 million in Irish Life's accounts at December 31st 1997. Irish Life retains some 393,000 Almanij shares with a current market value of £21.2 million. The sale will have no affect on Irish Life's joint venture operations with Kredietbank in the Irish market and in Hungary, according to an Irish Life spokesman.
The proceeds of the sale will be held in cash initially and reinvested over time.
Almanij is a quoted Belgian holding company whose shares have risen sharply in recent months. The shares have benefited from a buoyant local market and from the announcement of the merger between Kredietbank and the Belgian insurers ABB and Cera to create the largest financial services group in Belgium.
Irish Life has held shares in Almanij for a number of years and has increased its stake over the years. The strong rise in the Almanij share price meant that the holding became too big within Irish Life's strategic investment portfolio, the Irish Life spokesman explained.
That portfolio, which includes other group interests such as AGF-Irish Life and Irish Life International, was valued at £173.9 million at the end of 1997, up from £103.8 a year earlier. Most of the increase in value came from the rise in the value of the Almanij shares which accounted for 10 per cent of the portfolio.
Historically the holding was worth about £20 million and we have now reduced it back to this level, the spokesman said. The reduced holding of 393,000 shares was considered to be a more appropriate level of investment as a proportion of total shareholders funds, he said.
Before the share sale Irish Life held a two per cent stake in Almanij. This investment contributed £23 million to Irish Life's 1997 profits. Almanij has a six per cent stake in Irish Life. Irish Life and the Almanij subsidiary Kredietbank have a number of joint venture operations. In the Irish market Irish Intercontinental Bank is 75 per cent owned by Kredietbank and 25 per cent owned by Irish Life. Irish Life Finance Group is an effective joint venture between the two companies.
In Hungary the two companies own 48 per cent of K & H Bank as equal joint venture partners. These activities and relationships are unaffected by the share transaction, the spokesman said.
