Will AIB shares be at lower prices than at present when floated on the open market? Would you advise to buy then?

Mr S.B., email

There's nothing like a big stock market flotation to whet the investor appetite. And when, like Telecom Éireann and Aer Lingus, the company in question is previously publicly owned, everyone feels both that they are familiar with it as a regular user and also that they have a stake in it by virtue of its taxpayer owned status ahead of flotation.

That, of course, didn't stop hundreds of thousands of Irish shareholders suffering losses on the the Eircom IPO – the first great exercise in shareholder democracy in Ireland. The bruising nature of that experience – and the scale of the losses suffered by some – has been enough to make large number of Irish investors wary of putting their money into the stock market – any stock market.

AIB is another brand to fall into the category of “familiar”. One of Ireland’s big two retail banks, most of the country will have had an account with it at some stage in their lives. And, of course, it is owned by the taxpayer by virtue of the State’s 99.9 per cent holding in the business.

If anything, that should give pause for thought. Brand identity and familiarity can cloud objective judgment. There appears to be significant "layman's" interest in AIB's imminent flotation, in a way there hasn't been for other recent Dublin IPOs. I don't recall any excitement or investor queries when venture capital firm Draper Esprit floated in Dublin last year, or when the State's largest hotel group Dalata joined the market in 2015. That would suggest it is the brand that is leading the charge, not dispassionate investor analysis.

Yes, of course, the AIB float is bigger – it is reckoned it will be one of the largest IPOs even on London’s main market in the last 20 years – but it’s still important to step back from instinct and take a cold look at the case for investing.

None of which is to suggest you should, or should not, put money into the flotation. As it happens, I am neither qualified nor authorised to offer that sort of investor advice – ie stock picking, etc – and the Central Bank might take a dim view of it if I tried to do so.

Clearly AIB is a different and more solidly managed bank now than when it required a massive State bailout and it is lending into the fastest growing EU economy. So far, so good. But it still has a substantial bad loan problem, it will have to contend with the unknown but feared consequences of Brexit on the Irish economy and then there is the Trump factor and what any fallout from US policy could mean for Ireland Inc. And those are just some of the “known unknowns”. Other factors will undoubtedly emerge with the potential either to drive growth or restrict it.

In relation, specifically, to pricing, that won’t become clear until late June, just before the shares actually list and it will be based in large part on demand. The advisers on the IPO are currently drumming up interest in the IPO. Once the formal prospectus is published, people will be able to formally declare an interest in buying shares but they will do so in advance of any ruling on price.

It appears the Government is wary of AIB becoming a big retail investor play. Only around 10 per cent of the 25 per cent of the bank that the State is selling – ie around 2.5 per cent of all the shares – will be available to individual investors and it has already been confirmed that the minimum investment will be €10,000. That’s quite an ask for most people and it’s also quite an investment in a single stock on a single, small market in a world where diversification is generally advised.

What is certain is that the Minister and the bank have previously warned that AIB’s tiny pool of listed shares was trading at unrealistically high levels. Stockbroker Cantor Fitzgerald, which is a participating intermediary in the flotation, said only last week that recent trading in the bank’s shares at levels around €9 a share would be nursing substantial losses when the IPO took place. Since then, the market price of the shares has fallen below €7.

Whatever you decide, you should remember the golden rule: never invest money in the stock market that you cannot afford to lose.

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.