KKR’s Kion gears up for IPO

The German forklift giant is planning a listing this summer, which could value the company at up to €5bn.

Kohlberg Kravis Roberts, the US-listed asset management firm, is gearing up for a float of German portfolio company Kion Group. 

The warehouse equipment maker, which KKR co-owns with Goldman Sachs, will seek an IPO on the Frankfurt Stock Exchange this summer. The listing could value the company at up to €5 billion, a source close to the matter said. KKR declined to comment. 

Kion is Europe’s largest producer of industrial trucks by revenue, and the world’s number two behind Toyota Motors. The group, whose six brands make forklifts and other material handling vehicles for industrial clients, is also dominant in China, where it is the largest foreign manufacturer. It has around 21,000 employees and posted sales of €4.7 billion in 2012. 

Its flotation plans come after the decision by its owners to sell 25 percent of the group to Weichai Power, a Shandong-based diesel engine maker, in August 2012. The proceeds of the transaction were used to pay down debt. 

Kion is the second largest
maker of forklifts wordlwide

Weichai, which also acquired 70 percent of Kion’s hydraulic business last year, is to increase its holding to 30 percent upon completion of the offering. KKR and Goldman Sachs will retain a majority holding in the company after the public launch. 

The IPO will generate a capital increase of about €500 million for the company, the source added, with Weichai Power adding in another €400 million to bring its stake to 30 percent. It is also understood that KKR and Goldman Sachs will transfer a loan of €100 million into equity, adding up to proceeds from the float of about €1 billion. 

Both investors acquired the company in 2006, in a deal that implied an enterprise value of around €4 billion for Kion. The transaction was said to comprise €2.6 billion in debt, €300 billion in pension liabilities and €1 billion in equity. 
The focus since then had then been on restructuring the company – which, like much of Germany’s manufacturing sector, suffered from the financial crisis – as well as opening it up to emerging markets. 

If the listing is successful, it would be the first IPO backed by KKR in Germany since the financial crisis. Previous listings by the firm have included Wincor Nixdorf, a retail and bank branch hardware provider, MTU Aero Engines, an engine manufacturer, and Demag Cranes, an industrial crane maker. All were floated on the Frankfurt stock exchange prior to 2006. 

Kion would also be one of Germany’s largest listings of the year, in a sign that the recent come back to health of the country’s capital markets could potentially offer new avenues for exits for private equity firms. EQT’s Springer Science, a scientific publisher, and Terra Firma’s Deutsche Annington, a real estate group, are also expected to announce plans to float later this year.