As of: February 13, 2024, 5:15 a.m
By: Lisa Mayerhofer
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The Augsburg tank supplier Renk successfully went public on the stock exchange on Wednesday.
When it comes to stocks, it's mainly arms companies that have bought in - it's all about control.
Frankfurt - It was a long start, but now the Augsburg defense supplier Renk is successfully celebrating its stock market debut: On the price board of the Frankfurt Stock Exchange, which was completely bathed in the company's color orange, 17.50 euros was the first price that lit up on Wednesday shortly after the start of trading, to cheers from the investment bankers on the floor.
That was 17 percent more than the issue price of 15 euros.
Later, the securities of the 150-year-old traditional company increased to 18.99 euros.
“The trust of our investors and the megatrends of the turnaround and energy transition give us additional tailwind,” said CEO Susanne Wiegand.
The Renk large gearboxes are used in tanks, which are experiencing a boom in the wake of global armament - the so-called turning point - but also in ship engines and generators for generating energy.
An employee assembles the transmission for a tank at the Renk company.
© Stefan Puchner/dpa/archive image
Tank supplier Renk: Second attempt at IPO
“This is the perfect result for the company and for the investors,” said one of the bankers involved.
It was Renk's second attempt.
In October, the company had to cancel its IPO at the last minute because many investors got cold feet.
Demand – especially from long-term investors – has now significantly exceeded the issue volume, explained Heiko Leopold from Deutsche Bank, who helped organize the IPO.
It was worth keeping in touch with the potential subscribers, said another banker.
“The price development shows that the mood is now significantly better.”
Renk is valued at 1.75 billion euros at the first price.
For the company it is a return to the stock market.
The financial investor Triton bought the former MAN subsidiary Renk from the Volkswagen Group just over three years ago and took it off the stock exchange.
Under the aegis of Triton, the company also made the leap into the US market through an acquisition.
“Today's step onto the trading floor underlines the successful development that Renk has demonstrated in recent years,” said Triton manager Claus von Hermann, who chairs Renk's supervisory board.
Renk on the stock exchange: Armament companies in particular are hit
Within two days, Triton placed 33.3 million Renk shares for 500 million euros with institutional investors, thereby reducing its stake to 66.6 percent.
The issue was increased by 50 million euros at the last minute due to high demand.
The “Leopard 2” tank manufacturer KNDS (KMW+ Nexter Defense Systems) alone subscribed for shares worth 100 million euros.
The major customer now holds 6.7 percent of Renk.
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The US asset manager Wellington, one of the largest arms investors in the world, invested 50 million euros in Renk shares.
German fund companies are still shying away from defense stocks because of their strict ESG guidelines, a banker said.
“But Germany needs to invest more in defense, and the always skeptical German investors are now thinking more about it.”
The arms industry is coming together: it's about control
The Renk holdings are already showing that the arms industry is moving closer together.
Renk's major customer and Leopard manufacturer KNDS, in particular, has invested a lot and could even increase its shares to up to 25 percent at a later date, as the
Süddeutsche Zeitung
writes.
A spokesman explains the 100 million euro investment in the supplier as follows: “We want to ensure that Renk remains independent.” The company is one of the most important suppliers to KNDS.
So it's about control.
The war in Ukraine and the conflict with Russia have woken up many companies and politicians.
It plays a big role who has a hand in the companies that are important to the defense industry.
Last November, Renk boss Wiegand, according to
the Süddeutscher Zeitung
, called for “medium and long-term industrial policy thinking” in Germany.
It's about a "high-performance industry", which is why we have to "secure Germany's sovereignty" and must not "create dependencies that are not absolutely necessary".
With material from Reuters