Executed via an accelerated book build, the placing price was €2.96 a share.
This sale of 134 million ordinary shares further lowers the state’s shareholding in the bank to 57% from nearly 62%.
The government holds 1.52 billion shares in AIB after the latest disposal.
At the beginning of this year, the state’s interest in the bank was 71%.
The government has now reached a “lock-up” period of nearly three months before weighing another accelerated bookbuild transaction.
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The move is part of the government’s plan to dispose bank stakes, which it had picked during the crisis-era proper crash.
Ireland had infused €64bn into the domestic banking sector during that period, including an almost €21bn bailout for AIB.
The state has so far recouped over €11bn of the money spent to rescue AIB.
AIB Group CEO Colin Hunt said: “It is another important development in the process of returning the State’s investment in the Group and a normalisation of the share register. AIB owes the Irish taxpayer an immense debt of gratitude for its support during the financial crisis.
“We remain focused on our strategy to grow and strengthen the Group to ensure we continue generating sustainable returns for all our shareholders.”
Ireland Minister for Finance Paschal Donohoe said: “As I have previously stated, this Government believes that banking is an activity that should in the main be provided by the private sector and that taxpayer funds which were used to rescue the banks should be recovered and used for more productive purposes.”