Within a few hours, the German government raised 2.43 billion euros by selling Telekom shares and wants to invest the money in restructuring Deutsche Bahn. The state bank KfW, which holds the package together with the federal government, placed 110 million shares in the Bonn-based Telekom group, thereby reducing the state’s share from 30 to 27.8 percent.
“The federal government will use the net proceeds to strengthen the equity of Deutsche Bahn AG and to expand the rail infrastructure in Germany in a forward-looking manner,” the Federal Ministry of Finance explained. Minister Christian Lindner has budgeted around four billion euros from the sale of state holdings to renovate the rail network – the money is now secure. In recent months, KfW had already quietly sold 22.4 million Telekom shares on the stock exchange “in order to participate in the favorable market development.”
The FDP-led finance ministry remained tight-lipped about whether and when it would allow further Telekom shares to be put on the market. The federal government’s interest in Deutsche Telekom is unchanged. The federal government and KfW remain “joint key shareholders in Deutsche Telekom AG and will maintain the necessary level of participation,” the statement said. In any case, in the next three months, KfW is not allowed to sell any more Telekom shares without the consent of the banks. The shares were placed with large institutional investors at a price of EUR 22.13. That is only 2.5 percent less than the Xetra closing price on Monday. Discounts of three to seven percent are usual for such large share sales. The price is a good five percent below the annual high.
The placement was organized by Deutsche Bank, JP Morgan and Morgan Stanley. “In agreement with the Federal Ministry of Finance, KfW once again took advantage of the stable conditions on the stock markets in the first half of the year to take privatization steps,” explained KfW Treasurer Tim Armbruster. Only in February, it sold a package of Post shares for 2.17 billion euros – also in favor of Deutsche Bahn.