Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
German defence contractor Renk has revived plans to list in Frankfurt with the Franco-German military consortium KNDS stepping in as an investor, just four months after a last-minute cancellation of its initial public offering in October.
The Bavarian maker of gear boxes, slide bearings and transmissions for tanks and frigates said on Monday that its owner, private equity group Triton Partners, would offer 30 per cent of its shares up for a free float.
Trading of shares in Renk, which have been priced at €15 and value the company at €1.5bn, would commence on the Frankfurt Stock Exchange as soon as Wednesday, the company added.
KNDS — the joint venture between German Krauss-Maffei Wegmann and French Nexter that is developing a future tank system — and Boston-based asset management group Wellington Management Company, have pledged to subscribe to shares worth €100mn and €50mn respectively. Triton will remain Renk’s largest shareholder.
The news is a positive sign for European markets, after Triton in October pulled the plug on the listing just hours before the planned start of trading, which Renk at the time attributed to the weak outlook for markets.
Renk postponed its plans just days before Hamas launched its attack on Israel, which triggered the war in Gaza that has already killed more than 25,000 people and has spurred tensions across the Middle East.
Growing geopolitical instability has been a boon to defence contractors, which had largely been shunned by investors until war broke out in Europe in 2022 with Russia’s invasion of Ukraine. The hostilities prompted German chancellor Olaf Scholz to announce a historic reversal of the country’s decades-long pacifist policies.
Renk in November reported that its order intake in the first nine months of the year had jumped by nearly a quarter, compared with the same period in 2022, with revenues climbing 6 per cent to €653mn. Earnings before interest and taxes grew 6 per cent in the same period, reaching €104mn.
Chief executive Susanne Wiegand at the time said Renk’s order book was a sign of “the relevance of and demand for our products in both the defence and civil domain”.
The 151-year-old Renk was taken private by Triton in 2021, when the private equity group attained full control of the defence contractor after it acquired the majority of shares from automotive company Volkswagen the year earlier.
The company, which employs 3,400 people, also makes components for electric motors and wind turbines. Although Renk’s military business accounts for roughly 70 per cent of sales it has said it is well positioned to benefit from the German industry’s efforts to transition away from fossil fuels.
The revival of Triton’s plans to list Renk will add momentum to the reopening of Europe’s IPO market, after a dramatic slowdown in activity over the past couple years.
Private equity groups in particular are expecting a surge in activity this year as investors in buyout funds increase pressure to sell investments and return cash. EQT is reviving plans for an IPO of dermatology company Galderma that could come as soon as the first half of this year.
Read the full article here