Frankfurt, Berlin The armored gear manufacturer Renk is to go public. Financial investor Triton, who got involved three years ago, is making initial preparations for an IPO or sale of the company. The private equity firm has chosen three banks, Citi, Deutsche Bank and JP Morgan, as organizers of a potential deal, according to several people familiar with the matter. Renk could be valued at 2.5 to 3 billion euros in the transaction.
For Renk it would be a return to the stock market. The company was listed on the stock exchange for years until Triton bought Renk in 2020 for a good 700 million euros and took it off the market.
Triton and the banks declined to comment on a possible IPO or sale.
But the time seems favourable: with the war in Ukraine, interest in the armaments sector has grown massively. A quick step onto the floor or sale is still not to be expected, it said. It could be the end of the year at the earliest for the component manufacturer for vehicles and battle tanks from Augsburg, according to informed circles. Because the investor hopes that the general stock market environment will improve.
At the only IPO of the year so far, that of the Internet service provider Ionos, the shares are still listed below the issue price. There were no notable new issues in 2022 – with the exception of Porsche. However, the IPO of the sports car manufacturer is considered a special case, since the issue price hardly played a role for its owner. In the current environment, new issuers are finding it difficult to convince investors of their shares, and investors are demanding deep discounts.
Renk belonged to MAN for a long time and later to the Volkswagen Group. Just a few years ago, the company had planned to scale back the armaments business. Because financiers base their investments more on the so-called ESG criteria. ESG stands for the aspects of sustainability, social responsibility and good corporate governance. According to these standards, armaments companies were not particularly in demand among professional investors.
Renk gearboxes can be found in many battle tanks
But with the outbreak of the Ukraine war, the situation changed massively. Business with tank manufacturers is back in focus. Renk transmissions are installed in all western battle tanks, such as the Leopard, Challenger, Abrams and Israel’s Merkava models. Renk gearboxes can also be found in the ships of naval forces.
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Like other armaments manufacturers, Renk is benefiting from a significant increase in demand. While Renk’s business has tended to stagnate over the past ten years, sales recently jumped by around half to around 900 million euros.
The entire armaments industry, which for years was primarily dependent on the heavily controlled export business, is expecting major orders from Germany and other European countries. This is not just about the short-term need for armaments in Ukraine. Experts assume that the armaments industry will have to be ramped up over years in order to keep Ukraine and its allies permanently able to defend themselves even after the end of the war.
A few days ago, the Bundestag approved armament projects for the Bundeswehr worth tens of billions, including the procurement of F-35 fighter jets from the United States.
But the companies in the strictly regulated business insist on collateral. On the one hand, they are not allowed to produce weapons and ammunition for stock without orders. On the other hand, it is said in background talks that a quick end to the war could quickly dissolve the political support for industry and the hoped-for budget increases. SPD leader Lars Klingbeil had called for a “pact with the armaments industry” in this context. Talks are currently underway about long-term framework agreements.
Cooperation: Larissa Holzki
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