Germany sold a 2.5 billion euros (S$3.66 billion) stake in Deutsche Telekom, the latest in a series of moves by the cash-strapped government to divest from some of its corporate holdings.
German state-owned bank KfW is offering institutional investors 110 million shares, the lender said late on Monday (May 3). The placement will bring the aggregate holding of KfW and the government to a combined 27.8 per cent, with free float increasing accordingly.
The finance ministry said the net proceeds will be used to strengthen the equity of state rail operator Deutsche Bahn and to build out Germany’s rail infrastructure.
“Due to the receptive stock market environment, the placement was successfully completed,” the ministry said in an emailed statement.
Chancellor Olaf Scholz’s ruling coalition is under pressure to raise cash to help smooth negotiations over next year’s budget after a key funding tool was struck down by the nation’s top court last year.
Berlin is trying to come up with savings measures without compromising efforts to lift Europe’s biggest economy out of a slump or modernise and expand the armed forces after years of neglect.
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The latest sale is part of what the finance ministry called the government’s “responsible privatisation policy.”
Deutsche Bahn is currently gathering bids for its DB Schenker logistics unit, which could fetch more than15 billion euros, people familiar with the matter said last month. KfW earlier this year raised 2.2 billion euros selling a stake in former mail monopoly Deutsche Post.
The books on the Deutsche Telekom stake sale closed on Monday, with settlement expected on Thursday, according to the terms.
Morgan Stanley, JPMorgan Chase and Deutsche Bank are offering the shares. KfW and the German government will remain the company’s largest shareholders.
The divestment comes less than three weeks after the telecommunications operator, Europe’s largest, beat first-quarter earnings estimates thanks to growth in its two main markets, Germany and the US.
The company’s shares have gained 4.1 per cent this year. KfW already sold 22.4 million shares over the market in the second quarter.
Meanwhile, Germany is nearing a decision to strip Chinese critical components from the nation’s 5G core network by 2026 – a move that will have a significant impact on Deutsche Telekom’s business. The Bonn-based company has said that a ban of Chinese components by 2026 is not realistic. BLOOMBERG
