Germany's state-owned investment bank KfW sold 110 million shares in telecommunications firm Deutsche Telekom on Monday, the German Finance Ministry said, stating the sale will benefit the country's rail network.
"The federal government will use the net proceeds from the transaction to strengthen the equity capital of Deutsche Bahn AG and to expand the railway infrastructure in Germany in a forward-looking manner," the ministry said, without mentioning the specific value of the sale.
Germany's rail network is considered dilapidated and overloaded, with disruptions, repairs and construction work along major routes contributing to chronic punctuality issues for the railway.
State-owned railway operator Deutsche Bahn announced at the end of April that it plans to renew 2,000 kilometres of track and 2,000 points this year as part of an effort to update the country's ageing rail infrastructure.
Earlier on Monday, the KfW announced that intends to sell off another tranche of the shares that it holds in Deutsche Telekom to institutional investors for an estimated value of almost €2.5 billion ($2.7 billion).
"Due to the receptive stock market environment, the placement was successfully completed," the ministry said, adding that the sale has reduced the German state's stake – held directly and indirectly through the KfW – to 27.8%.
Deutsche Telekom shares declined slightly in after-hours trading on the Tradegate platform after the news was announced.
"The KfW and the state will remain the largest shareholders in Deutsche Telekom AG," the bank said when announcing the planned sale. The KfW sold 22.4 million shares in Deutsche Telekom in the second quarter through market operations.
At the end of last year, the German state along with the KfW still held more than 30%. Japan's Softbank held a stake of 4.5% at the time.