FRANKFURT/BONN/BERLIN (dpa-AFX) - Germany's development bank KfW is once again divesting itself of Telekom shares, thereby raising billions for the federal government. According to the Federal Ministry of Finance, the money will go to the railroads. "The federal government will use the net proceeds from the transaction to strengthen the equity of Deutsche Bahn AG and to expand the rail infrastructure in Germany in a forward-looking manner," the Ministry of Finance announced on Monday evening. The shares went to major investors. The Deutsche Telekom share lost around two percent in midday trading on Tuesday.

The move did not come as a surprise to investors; the market had expected further sales of shares by the federal government. "No surprise," said one trader, adding that the lower prices could now be an opportunity to buy in. The sale reduces the share overhang, which is positive.

After the close of trading on Monday, KfW announced the sale of 110 million shares in DAX-listed Deutsche Telekom to institutional investors. "Due to the receptive stock market environment, the placement was successfully completed," explained the Ministry of Finance.

The shares were placed at a price of 22.13 euros. The last price was 22.18 euros. In total, the Forderbank raised around 2.43 billion euros with the sale. The placement was organized by Deutsche Bank, JPMorgan and Morgan Stanley. The joint stake in Deutsche Telekom AG held directly by KfW and the Federal Republic fell to around 27.8 percent.

The Federal Government is thus continuing its responsible privatization policy, the Ministry announced. "In view of the continuing interest of the Federal Republic, the Federal Republic and KfW will remain joint central shareholders of Deutsche Telekom AG and will maintain the required level of participation." In any case, KfW may not sell any further Telekom shares in the next three months without the consent of the banks.

"KfW and the Federal Republic remain the largest shareholders of Deutsche Telekom AG," the bank's announcement also stated. In the second quarter, KfW had already sold 22.4 million shares via the stock exchange. At the end of 2023, the federal government and KfW still held a good 30 percent of Deutsche Telekom. At that time, the Japanese Softbank Group still held a 4.5 percent stake in the Bonn-based company.

It was only in February that KfW sold a package of Deutsche Post shares for almost 2.2 billion euros. In view of the budget debate and the German rail network in need of renovation, the government needs money. The German government wants to modernize the rail network in the coming years with many billions of euros - plans that were thrown into disarray by the budget ruling of the Federal Constitutional Court in November last year. By mid-December, however, it was clear that there would be no cuts to rail spending./mne/sku/ngu/men