US Investment Firms Sell 10.8% Stake in KION

linde a subsiduary of KION
Photo Courtesy of Lukas Horacek via Wikimedia Commons

Goldman Sachs and the private US equity firm KKR announced recently that a joint holding company they own is selling its 10.8 percent share in KION, the world’s second largest manufacturer of forklifts after Toyota.

The announcement comes on the heels of the 2012 purchase of a 25% stake in KION by Weichai Power, an utility company owned by the Chinese government. In June, Weichai Power boosted its stake in KION to 30% after the German forklift manufacturer issued its first Initial Product Offering (IPO) on Franfurt’s Xetra Stock Exchange.

The sell-off of Goldman/KKR’s estimated 10.7 million shares of KION Group AG began January 7. At KION’s current share value, the combined stake would be worth an estimated $450 million.

Sell-Off Part of Long-Range Plan

In a joint statement, Alexander Dibelius, head of Goldman Sachs’ European division, and Johannes Huth, KKR’s European Chief, said the sell-off had been in the works for some time.

“KION has developed excellently since our investment in 2006,” the pair said in the announcement. “Weichai Power’s investment and the IPO were essential milestones on the company’s further growth path. The current share price speaks for itself. We benefit from this attractive market environment by selling a proportion of our stocks.

“KION has immense potential and we look forward to accompanying the company as major shareholders further on,” the statement said.

About 3.3% of the stake will be transferred to Waichai Power. The remaining shares will be sold by Superlift Holding — the holding company held jointly by Goldman Sachs’ GS Capital Partners and KKR — to institutional investors over the next three months.

Even after shedding the 10.8 million shares, Superlift Holding will remain the largest shareholder in KION.

First Europe, Now Asia

KION, which is based in Weisbaden, has made no secret about its intention of exploiting China’s building boom. In December, company CEO Gordon Riske said the German forklift manufacturer’s goal was to plant a flag in the Asian heavy equipment market.

“By setting up KION South Asia, our new entity in Singapore, the KION group has put in place the organizational structure that will enable it to unlock the full potential of the market in south and southeast Asia,” Riske said in a news release. “Our many years of experience in China are also benefiting us in other parts of Asia. Our goal is to carry on our market share in Asia and to acquire additional customers across the region. To this end, we are constantly extending the local sales and service networks of the KION Group’s global brands.”

KION currently has two research and development centers, two manufacturing facilities, and more than 100 sales and service storefronts in China. Through its Linde Hydraulics subsidiary, KION also is China’s largest international manufacturer in the premium segment and the market leader for electric forklifts and warehouse trucks.

Continued Efforts to Expand Asian Presence

KION currently accounts for about 7% of the entire Chinese market for industrial trucks, but it doesn’t plan on stopping there. Its strategic alliance with the state-owned Waichai Power strengthens both partners, according to Riske

“It offers us the opportunity to break into new areas of business and to leverage synergies for our mutual benefit,” he said.

KION was one of several German companies — including giant chemical manufacturer Evonik Industries — that opted to go public in June in the wake of the resolution of the Eurozone sovereign debt crisis, according to the Financial Times.

As a result of Weichai’s investment in KION, the company was able to pay off much of its debt and its IPO valued the company at nearly $4 billion.