Renk plans Frankfurt listing to fund overseas growth

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German military contractor Renk has announced plans to list its shares on the Frankfurt stock exchange before the end of the year, as the maker of gear boxes for tanks targets expansion abroad.

The Augsburg-based company, which has said it controls 30 per cent of the global market for transmissions in military vehicles, was sold three years ago by Volkswagen to private equity group Triton in a €530mn deal.

Renk said on Tuesday that Triton would remain its largest shareholder after the intended float. It added that there would be a “meaningful free float” of shares, without saying precisely how many would be offered.

Renk makes the transmission for Germany’s Leopard 2 tank, which several countries have supplied to Ukraine for use in its counteroffensive against Russian forces.

The company has benefited from increased international insecurity as Russia’s full-scale invasion of Ukraine has prompted governments to modernise or increase their military capabilities. Renk expects revenues of between €900mn and €1bn this year and 10 per cent year-on-year growth in the “mid term”.

Chief executive Susanne Wiegand said the timing of the initial public offering would allow the company to tap into a “sustainable growth momentum in the global defence industry [and] higher needs for security”.

Aside from its military business, which accounts for about 70 per cent of sales, Renk said it was well positioned to benefit from the energy transition. The company supplies customers that manufacture and work in hydrogen technology, carbon capture and heat pumps for industrial use.

The company, which employs 3,400 people, is also a market leader in slide bearings used in electric motors and water turbines.

A string of German companies have said this year they will seek stock market listings. Sandal maker Birkenstock is seeking an $8bn valuation and medical glass producer Schott Pharma has announced plans to sell shares worth $860mn.

Renk, which is expecting profit margins this year to be in the range of 16 to 17 per cent, is expecting a valuation of roughly €2.5bn. As of June, the company had an order backlog worth €1.7bn, which it said was an all-time high.

“The global need for technological renewal of the armed forces as a result of the changing times will continue to be a driver of our growth in the future,” said Wigand when announcing the company’s most recent earnings in early September.

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