Kuwait Investment Authority Cuts 20 Million Shares in Mercedes-Benz, Retains 53 Million Shares

Kuwait Investment Authority (KIA), one of the largest sovereign wealth funds in the world, has decided to reduce its stake in Mercedes-Benz Group AG. The sale of 20 million shares, worth approximately €1.4 billion, will leave KIA with a remaining stake of 53 million shares in the German luxury carmaker. The sale represents about 1.9% of Mercedes’ share capital and was priced at €69.27 per share, a 3.6% discount to the stock’s closing price on Tuesday. Despite the reduction in its stake, KIA has stated its commitment to continuing its successful partnership with Mercedes-Benz and plans to remain a key shareholder in the company.

Mercedes-Benz Group AG, under the leadership of CEO Ola Källenius, has undergone a transformation in recent years. The company has shifted its focus towards more profitable segments, such as luxury cars, and pared back its offerings of entry-level models. As a result, the average price of a Mercedes car has increased by 43% since 2019. The company has also separated its luxury car business from its commercial vehicle operations, spinning off Daimler Truck Holding AG in late 2021.

Despite its recent success, Mercedes-Benz has faced some challenges, including a reduction in the price of its flagship electric models in China and a weakening European and US economy. Nevertheless, KIA’s decision to reduce its stake in the company is part of its effort to diversify its direct public equities portfolio. The sovereign wealth fund has been a shareholder in Mercedes-Benz for nearly 50 years and, prior to the sale, owned 6.8% of the company, making it the third-biggest holder.

In a statement, Mercedes-Benz said that KIA remains committed to the partnership and will continue to be a key shareholder. The sale of shares is expected to bring in €1.385 billion for KIA, reducing its stake in the company to less than 5%.