SMAG starts weakly at the Frankfurt Stock Exchange – share price plunges at the open

Price loss and placement details

According to a Deutsche Börse announcement, a total of 2,817,500 shares were placed, including 650,000 new shares from a capital increase as well as 1,800,000 existing shares from the prior shareholder SMAG Group GmbH, a wholly-owned subsidiary of the investment company AEQUITA, plus 367,500 shares from the over-allotment option. Assuming full exercise of the greenshoe, the placement volume comes to roughly €129.6 million, and the market capitalization stands at just under €260 million.

The company does not reach the targeted net proceeds of roughly €30.5 million from the capital increase with the chosen minimum price. The money is to flow, among other things, into automation, capacity expansion at the Salzgitter site, and sales. The stabilization period, during which the lead manager Cantor is permitted to support the price, begins with the start of trading and ends no later than 30 calendar days thereafter.

Background: From mining to defense supplier

The company is more than 99 percent a defense company. SMAG builds mobile antenna mast systems for mission-critical deployments. Das bedeutet, dass wir für die Armeen dieser Welt eine mobile Kommunikationsinfrastruktur aufbauen. The antenna construction division was founded in 1974 as one of the subsidiaries of what was then a mining engineering company, which had been launched in 1919 by a mining engineer as Salzgitter Maschinenbau. The headquarters is located in Salzgitter.

While SMAG got off to a bumpy start, the Munich drone company Helsing collected, according to its own figures, $1.8 billion in fresh capital and is now valued at $18 billion. That underscores the high and growing confidence in AI-driven and software-based defense technology. The funding round reported by the Financial Times in May came to $1.2 billion; Helsing stated that demand had significantly exceeded the volume available.

Helsing raises billions

New and existing investors such as Disruptive, Iconiq, Goldman Sachs, JPMorganChase and the Canadian pension fund CPP Investments participated in Helsing's latest round. The lead investors were the US venture capital firms Dragoneer Investment Group and Lightspeed Venture Partners. It was the fifth funding round since the company was founded in 2021. In the previous round, Helsing had been valued at $12 billion; in total, the company has raised more than $3 billion since its inception.

Defense boom with question marks

Not all defense companies are currently able to make the leap onto the stock market. The tank manufacturer KNDS, by contrast, had put its own IPO on ice at the beginning of July. Die Rüstungsindustrie ist ein extrem dynamischer Sektor, wird aber lange nicht in der Lage sein, den Stellenwert der Automobilindustrie zu übernehmen, und wird damit auch lange nicht in der Lage sein, wegfallende Arbeitsplätze aus der Automobilindustrie zu übernehmen, said ING Bank chief economist Carsten Brzeski.

Prominent examples of companies strategically expanding their defense divisions include Mercedes Benz, the automotive supplier Schaeffler and Heidelberger Druckmaschinen. The Cologne-based engine manufacturer Deutz is also taking over the Flensburg-based military vehicle maker FFG, with the aim of developing vehicles for the Bundeswehr and NATO partners. The context of a growing European defense market, however, evidently was not enough to support the first trading day of the SMAG share.

Feindt has been at the helm of the company since the beginning of the year and is steering SMAG clearly in the direction of defense. The price performance on the first trading day shows how difficult it is – even for companies with a military focus – to convince the capital market when issue price and demand do not come together. Whether the stabilization measures by lead manager Cantor will take effect in the coming weeks remains to be seen.

The article was written by the editors Evelyn Schmal and Julia Walter of the finanzen.net team.

Evelyn Schmal, Julia Walter, Editorial team finanzen.net