IRISH LIFE Investment Managers (ILIM) has pulled its bid to acquire AIB Investment Managers (AIBIM).
ILIM had been chosen in February as the preferred bidder for AIBIM and was expected to pay €20-€25 million for its rival.
But with ILIM’s parent company Irish Life Permanent now set to be broken up following the outcome of last week’s bank stress tests, the company has decided to step away from the deal.
A spokesman for ILP confirmed yesterday that it has pulled out of the transaction.
“This was a group decision and was taken in the context of a very busy corporate agenda over the coming months.”
“It was therefore decided to concentrate on other transactions,” the spokesman added.
It is understood that staff at both fund managers were informed of the news yesterday.
ILIM is Ireland’s biggest fund manager, with assets of €32 billion under management.
AIBIM has assets under management of €9.4 billion and has offices in Dublin and New York.
Swiss asset manager Bellevue Group and stockbroking firm Bloxham were among the bidders for AIBIM.
They might now seek to renew their interest in the business.
IIU, the investment firm owned by financier Dermot Desmond, was also linked with an offer for AIBIM.
A new bid might centre around a deal being struck to retain the AIB staff pension fund as part of the transaction.
This represents a significant part of the business.
It is understood that ILIM was relaxed about this not being part of its deal to acquire the company.
AIB is seeking to sell its fund management arm to deleverage the business and raise cash to meet higher capital levels required by the Central Bank.
AIB needs another €13.3 billion to cover potential losses arising from unexpected shocks to the economy, according to “stress test” results.
The sale was also part of a restructuring agreement last year struck with the European Commission.
It was revealed last week that ILP requires €4 billion to cover the cost of potential losses from home loans, which amount to twice its deposits, and to insure against future risks to its solvency.
The group is now likely to be broken up, with Irish Life set to be floated on the stock market with the banking arm taken under State ownership.
