This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
The Ministry of State Assets is considering the sale of part of the government’s stake in PGZ (Polish Armaments Group). Wojciech Balczun, the minister in charge, recently announced such a plan. According to unofficial information obtained by XYZ, a 40–45% stake in the group could be sold to investors. Several scenarios are under consideration, but for now the most likely option is that the shares will be bought from the State Treasury by... companies controlled by the State Treasury. According to our sources, Orlen Group tops the list of potential buyers.
Significant boost to the state budget
The head of the Ministry of State Assets has announced plans to streamline the portfolio of companies in which the State Treasury holds stakes, with changes at PGZ (Polish Armaments Group) set to form an important part of the process.
“The Supreme Audit Office has repeatedly pointed out that the current shareholder structure raises serious concerns. PGZ is a key company from the standpoint of our security, and we want to strengthen it further. We want our companies to become PGZ shareholders and help bolster its credibility. Finally, we want PGZ to be able to mobilize funding to expand its production capacity,” State Assets Minister Wojciech Balczun told PAP Biznes, a business outlet of the Polish Press Agency.
He also made no secret of the fact that the planned changes at state-owned companies would generate additional revenue for the state budget.
“These transactions could result in significant budget revenues. I would like to stress, however, that these revenues will not come from reducing the degree of State Treasury control over the companies, nor do we plan to sell shares from our holdings outside the public sector,” Wojciech Balczun said.
Orlen does not rule it out
Our sources at the Ministry of State Assets say that a maximum of 40–45% of PGZ shares could be sold to investors. Before that happens, however, the ministry wants to remove the minority shareholders from the ownership structure. The State Treasury currently holds 76.26% of the defense giant’s share capital. Polish Defence Holding owns 12.28%, while the Industrial Development Agency holds 11.46%.
If the State Treasury decided to sell shares to stock-market investors, the offering could prove a major success. The defense sector is currently attracting strong investor interest. Europe’s star performer, Germany’s Rheinmetall, is valued at nearly EUR 50bn. In Warsaw, privately owned Niewiadów Polska Grupa Militarna is listed with a market capitalization of PLN 2.5bn (EUR 590m).
Our information indicates that such a scenario was considered by the Ministry of State Assets, but the chances of it being implemented are close to zero. Why? PGZ is one of 30 companies protected by law against sale to outside entities. Removing it from that list would require an amendment to the Act on the Principles of State Property Management. There is a strong conviction within the ministry that President Karol Nawrocki would veto such a change. That means PGZ shares can be bought only by companies controlled by the State Treasury.
According to our information, Orlen is one of the main potential buyers. First, the company can afford it. Second, as a major player in the chemicals and petrochemicals business, Orlen could supply products to the defense sector. We understand that opinions within the energy group are divided over a potential transaction. Some see it as an opportunity to build a new and powerful business pillar. Others fear that, by moving into yet another industry, Orlen could begin to resemble a Korean chaebol—an enormous, highly diversified corporate conglomerate.
“Orlen does not comment on acquisition processes, whether ongoing or potential, until they have been completed. Information on any investment decisions, including the potential acquisition of shares, is disclosed in accordance with the company’s reporting obligations. The company does not rule out analyzing areas of cooperation or involvement that could complement its core business and strengthen synergies across the group,” Orlen said in response to our questions.
This would be another acquisition for Orlen
Analysts are cautious in their assessments. Much will depend, among other things, on PGZ’s market valuation, which would run into billions of zlotys.
“If Orlen were to become a minority shareholder in PGZ, the transaction would make little sense. In that case, the idea would amount to little more than ‘parking’ the shares. Put plainly, the state budget would be replenished at the company’s expense. It would effectively replace the failed idea of introducing a windfall tax on fuel companies,” says Łukasz Prokopiuk, an analyst at DM BOŚ.
In his view, Orlen would stand to gain more from acquiring a majority stake in PGZ.
“In that scenario, Orlen would, over the long term, take control of a business that appears attractive and could eventually replace its fuel business. We must remember, however, that Orlen is still relatively fresh from several major acquisitions. Not long ago, it took over Energa, PGNiG and Lotos, and it is still learning how to operate in new areas. Adding yet another business at this stage could pose a major challenge for the company,” Łukasz Prokopiuk says.
Other state-owned companies remain silent
There is also speculation behind the scenes about the possibility of creating a consortium of State Treasury-controlled companies that would invest in PGZ. We sent questions on the matter to, among others, copper producer KGHM, utility Polska Grupa Energetyczna and insurance giant PZU. Only PGE responded, saying it would not comment. The energy group stressed that any answer on the matter could affect PGE’s stock-market valuation.
A defense giant
PGZ (Polish Armaments Group) was created through the consolidation of defense-industry companies carried out between 2013 and 2015. The group brings together several dozen industrial plants, service facilities and research centers that are of key importance to the country. Its main activities include the production of military equipment and soldiers’ personal gear, as well as providing services to customers in Poland and abroad. PGZ says it is a key producer of heavy equipment for the Polish armed forces, while at the same time investing in unmanned systems, electronics, counter-drone solutions, satellite technologies and new capabilities in weapons and ammunition.
“We want to strengthen PGZ’s position on a lasting basis and anchor in Poland the capabilities, production and supply chains that will determine the country’s security in the decades ahead. We are integrating the potential of our companies, expanding domestic production capacity and bringing Polish businesses, research institutions and technology partners more broadly into our cooperation,” Adam Leszkiewicz, PGZ’s chief executive, said as he announced the company’s participation in the International Defence Industry Exhibition (MSPO) in Kielce, which begins on September 8.
In 2025, PGZ generated consolidated revenue of PLN 18.5bn (EUR 4.4bn), up 33% from a year earlier. The group’s net profit rose by 66% over the same period, to PLN 2.8bn (EUR 660m).
Key Takeaways
- State Assets Minister Wojciech Balczun has announced plans to streamline the portfolio of companies in which the State Treasury holds stakes. The changes will include the ownership structure of Polish Armaments Group (PGZ). Our sources at the ministry say that as much as 40–45% of PGZ shares could be sold to investors. The stake is expected to be acquired exclusively by companies controlled by the State Treasury. According to our information, Orlen is one of the leading candidates to buy PGZ shares.
- Orlen does not comment on ongoing or potential acquisition processes until they have been completed. “The company does not rule out analyzing areas of cooperation or involvement that could complement its core business and strengthen synergies across the group,” Orlen’s press office told us.
- Opinions within Orlen itself are divided over the potential transaction, while experts remain cautious in their assessments. According to Łukasz Prokopiuk of DM BOŚ, such an acquisition could be attractive for the company provided that Orlen took a majority stake in PGZ. Otherwise, Orlen would merely be “parking” the shares in the defense company. “Put plainly, the state budget would be replenished at the company’s expense,” the analyst says.