Defence Minister launches tender to find strategic investor for explosives manufacturer Hexest Materials

Minister of Defence Hanno Pevkur has launched a selective tender to find a strategic investor for Hexest Materials, a state-owned explosives manufacturer, with applications open from interested companies until 25 May 2026.

Hexest Materials has been charged with the task of establishing a military explosives plant in Estonia so as to reduce the shortfall in explosives in the European defence industry, to boost Estonia's own defence industry and defensive capabilities, and to stimulate the national economy. The company is currently 100% state-owned, but a strategic investor will be involved in the future, with the state retaining its majority stake.

"The investor in question should be a manufacturer of explosives, ammunition or military weapons in a country with which Estonia is partnered or allied," Minister Pevkur explained. "The manufacturing of RDX military explosives is a key capability, but we also aim to make Hexest Materials both competitive and profitable."

In order to find a strategic investor, the Ministry of Defence has launched a selective tender for the transfer of the pre-emptive right to subscribe for shares in Hexest Materials. Participants in the tender will have to meet a number of pre-conditions to ensure both financial stability and the ability to enter and operate on the defence industrial market. In accordance with the terms of the tender, the strategic investor must have the capacity to invest at least 50 million euros in the company, and it must also be competent to manufacture and sell military explosives, military ammunition or military weapons and weapon systems. Because of the security considerations involved in the tender, the strategic investor will be subject to conditions relating to their trustworthiness and origins.

The Estonian government has also authorised the Minister of Defence to further increase the share capital of Hexest Materials. The strategic investor will receive a 49% stake in the company, with a right of first refusal to subscribe for shares in accordance with the investment agreement resulting from the tender. The state will retain a majority stake by subscribing for the remaining shares. The exact equity contribution and final share price will be determined in the course of the tender.

Established in 2025, Hexest Materials AS is a state-owned company with the Ministry of Defence as its holding administrator. Its field of activity is the manufacturing of RDX military explosives. The exact location of the plant is yet to be decided, with potential sites being considered in the context of the state's ongoing special planning process. The intention is to commence production at the plant in 2028.

For more details, see Ametlikud Teadaanded

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