“Market environment clouded”
Tank supplier Renk cancels IPO
October 5, 2023, 12:21 p.m
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It should be one of the few IPOs in Germany this year. But just hours before, the German arms company Renk surprisingly postponed the event on the Frankfurt stage – despite the armaments boom surrounding the war in Ukraine.
The Augsburg tank gear manufacturer Renk is not returning to the stock market. The company announced a few hours before it was scheduled to go public in Frankfurt: “The market environment has deteriorated noticeably in the last few days.” This is how Renk justified the short-term cancellation. It will be examined whether the IPO will be rescheduled later.
It had previously become apparent that the 27.03 million shares could only have been sold at the lower end of the price range. The accompanying investment banks had given investors 15 euros as the expected issue price on Wednesday. At this level, the issue was “many times oversubscribed,” it was said. The range went up to 18 euros.
The company, which formerly belonged to MAN, would have been valued at 1.5 billion euros at the announced price – that is more than twice the price that Triton paid at the beginning of 2020, but a significant discount to the valuation of other defense suppliers. The financial investor is now missing out on proceeds of 405 million euros. Triton bought Renk from the car manufacturer Volkswagen for almost 700 million euros and then – after 97 years – took it off the stock market. With the 300 million euro takeover of the Combat Propulsion Systems division from the US group L3Harris, Renk made the leap into the American market under his aegis.
Renk is a manufacturer of transmissions, vehicle drives, so-called power packs, hybrid drives, suspension systems, plain bearings, clutches and testing systems for military and civil use. In view of the rearmament, the Augsburg company is currently experiencing a boom. Transmissions for tanks and ships for the navy account for 70 percent of the 2022 sales of almost 850 million euros, with the rest coming from civilian business. Renk recorded a record order backlog of 1.7 billion euros at the end of the first half of 2022. CEO Susanne Wiegand wants to increase sales to one billion euros in 2023.
Mixed results for newcomers to the stock market
So far this year there have been only a few IPOs in Germany due to the economic weakness, sharp rises in interest rates and geopolitical uncertainty. Renk would have been only the fourth newcomer to the stock market this year. It is unclear how the next stock market candidate will react to Renk’s rejection. According to insiders, DKV Mobility, the mobility service provider from Ratingen known for its fuel cards, wanted to make its stock market plans public this week. The shares of the Mainz-based pharmaceutical packaging manufacturer Schott Pharma were quoted on Wednesday – a week after the initial listing – at 30 euros, eleven percent above the issue price of 27 euros. The shares of Thyssenkrupp’s hydrogen subsidiary Nucera have lost eleven percent since the IPO in July. The cloud and web hosting provider Ionos is almost a quarter below the issue price.