We are advising the state‑founded explosives manufacturer Hexest Materials on the involvement of a strategic investor. The company, established last summer, plans to build a military explosives plant in Estonia. This will help reduce the shortage of explosives in Europe’s defence industry, strengthen Estonia’s defence sector and defence capabilities, and stimulate the Estonian economy.
The Ministry of Defence will organise a competitive selection process to transfer preemptive subscription rights for Hexest Materials shares. Prospective investors must meet several strict preconditions to ensure both financial stability and the capability to enter and operate in the defence industry market.
The strategic investor must have the capacity to invest at least EUR 50 million
Finding a suitable investor is more complex than usual, as the investor must have the expertise to manufacture and sell military explosives, ammunition, weapons, and weapons systems. Given the security-sensitive nature of the process, the Ministry of Defence will also impose requirements related to the investor’s reliability and origin.
“To find a strategic investor, we are looking towards manufacturers of explosives, ammunition or military weapons operating in our allied and partner countries. The expertise of a future key partner will help Hexest Materials successfully enter the defence industry market, remain competitive and generate revenue,” said Minister of Defence Hanno Pevkur.
The strategic investor will acquire a 49 per cent stake in Hexest Materials by exercising pre‑emptive subscription rights in accordance with the investment agreement resulting from the competitive selection process. The state will retain a majority stake by subscribing to the remaining shares. The exact equity contribution and final share price will be determined during the selection process.
The aim is to begin explosives production in 2028.
Our services and client team
We are advising Hexest Materials on all legal matters related to the involvement of a strategic investor, including contractual and regulatory issues (including matters related to the disposal of state assets and other related matters).
The core project team includes partners Toomas Prangli and Kaupo Lepasepp, counsel Robin Teever, and senior associate Mario Sõrm.
