KNDS Awaits Auditor’s Green Light as Record €33bn Backlog Fuels Summer IPO Ambitions

Defence group KNDS targets June/July dual listing in Frankfurt and Paris, but an unresolved Qatar contract probe blocks auditor sign-off, while German state takes a strategic 40% stake.

Few companies can boast a €33.1 billion order backlog while simultaneously being unable to certify their annual accounts. That is the contradictory position KNDS finds itself in as it presses ahead with a dual listing in Frankfurt and Paris, targeting a June or July debut. The German-French defence group posted a 16% revenue increase to €4.4 billion in 2025 and booked a record €13.5 billion in new orders, yet a decade-old contract with Qatar continues to cast a shadow over its governance credentials.

The lion’s share of that growth came from Land Systems Germany, where sales climbed 17.4% to €2.5 billion, while the French arm added €1.3 billion, up 9.6%. The ammunition segment surged 24.7% to €612 million as KNDS fired up new production lines in Belgium and integrated the Görlitz plant. The operating momentum is strong, but the compliance question remains the single biggest variable for investors weighing the IPO.

The Qatar cloud refuses to clear

At the heart of the delay is a 2013 contract with the Qatari military valued at €1.89 billion, covering 24 PzH 2000 howitzers, 62 Leopard 2 tanks and additional equipment. KNDS’s board launched an independent investigation in April, hiring law firm Freshfields to review the transaction. The probe has so far yielded no evidence of criminal misconduct by current or former employees, but it has not been formally completed.

That fine distinction matters because auditor PwC has refused to sign off on the 2025 financial statements until it receives the final report. Without a certified audit, no IPO prospectus can be approved. KNDS insists the investigation is far enough along to allow the audit to be wrapped up, but until PwC puts pen to paper, the timetable remains fragile. A breakthrough would open the door to a summer listing; a further delay could push the float into the second half or force a fundamental restructuring.

Berlin takes a strategic stake – then steps back

The ownership structure is also being reshaped. On 21 May 2026 the German government agreed to acquire a 40% stake in KNDS NV through state-owned lender KfW. The plan then calls for Berlin to reduce its holding to 30% over two to three years, while Paris simultaneously trims its own interest from 50% to 40%. The net effect is equal voting rights for both capitals, ensuring neither side can dictate decisions on plant locations, production lines or strategic direction.

The manoeuvre eases one source of political uncertainty but introduces another: investors must now assess how much influence the German state will wield as a minority shareholder, even after the planned partial exit. The IPO will test whether the market is comfortable with the residual public-sector presence that comes with strategic defence assets.

Factories race to meet demand

While the audit and governance questions dominate headlines, the operational side is charging ahead. CEO Jean-Paul Alary confirmed on 26 May that KNDS is in talks with Volkswagen and Mercedes-Benz about taking over factories in Osnabrück and Ludwigsfelde. The investment could reach around €1 billion and would bring roughly 2,000 employees into the group.

Separately, KNDS opened a new plant in Norway in May and expects to start producing up to 36 Leopard 2 tanks annually there from the third quarter of 2026. A British order for 72 howitzers worth nearly £1 billion adds to the workload. The EuroPULS joint venture with Elbit Systems – a 50:50 entity based in Kassel – achieved a new operational readiness level on 1 June. It builds guided rocket launchers with a range of 300 kilometres, and Germany has ordered five launchers under a government-to-government agreement involving the Netherlands and Israel, with deliveries scheduled for 2027.

To strengthen its balance sheet ahead of the float, KNDS sold roughly 5.8 million shares in transmission specialist RENK in May, netting €262 million. It retains a residual 10% stake in that company. The proceeds are earmarked for capital structure optimisation.

The price of governance risk

IPO advisers have already trimmed the group’s valuation range to €18–20 billion, down from an earlier €25 billion. Around a quarter of equity is earmarked for listing. The discount partly reflects the compliance overhang and the complex state shareholding structure. As the prospectus takes shape, the market’s true judgement will become visible: will the record backlog and rising defence budgets outweigh the governance premium investors typically demand? For KNDS, the answer rests not on its factory output but on the outcome of a single law firm’s report and an auditor’s signature.