KNDS Clears Audit Hurdle With Record Backlog as UK Howitzer Deal Adds Momentum to IPO Countdown

KNDS releases audited 2025 financials after PwC impasse, paving way for Frankfurt-Paris IPO. But 40% state stake and thin free float raise governance concerns.

The path to a dual listing in Frankfurt and Paris has suddenly snapped into focus for KNDS. The defence group released its audited 2025 financials on Tuesday, ending a weeks-long impasse with auditor PwC that had threatened to derail the entire flotation timetable. Yet even with the certified accounts in hand, investors face a market debut defined by heavy state control and a wafer-thin free float.

PwC had refused to sign off on the annual report until an internal investigation by law firm Freshfields into a historic Katar armoured-vehicle deal was completed. That 2013 contract, worth €1.89 billion, covered 24 Panzerhaubitzen 2000 howitzers and 62 Leopard 2 tanks. The probe turned up no evidence of criminal conduct by current or former employees, clearing the way for PwC to issue its audit opinion. Without that testat, there could be no prospectus — and no IPO.

The numbers behind the delay are strong. Revenue climbed to €4.4 billion in 2025, while the order backlog surged 41 percent to €33.1 billion from €23.5 billion a year earlier. In a separate boost, KNDS secured a British order in mid-May for 72 howitzers valued at nearly £1 billion, further padding the pipeline.

What happens next depends as much on Berlin as on the company’s own execution. The German government plans to acquire a 40 percent stake in KNDS NV via the state-owned KfW bank ahead of the IPO, mirroring France’s existing holding. That would leave the public with only 20 percent of the shares at listing — or 25 percent if a combination of a capital increase and sales by private owners goes through as management hopes. Investment banks have pencilled the group’s overall valuation at around €20 billion. JPMorgan and Lazard are running the deal, which is expected to provide an exit for the Wegmann family, the longtime owner of Krauss-Maffei Wegmann.

But Berlin is still haggling over the price. Chancellor Friedrich Merz’s coalition insists on buying its stake at the IPO offer price to avoid overpaying. Talks continue, and the outcome will determine whether the flotation proceeds in June or July as planned. Both governments intend to reduce their holdings to 30 percent each within three years, which would gradually expand the free float to 40 percent — a level that would make index inclusion more feasible.

KNDS’s supervisory board chairman Tom Enders has publicly warned that the state stranglehold cannot be permanent. “Defence companies do not need a government majority in the long run,” he said, adding that the current governance structure risks blocking much-needed consolidation in Europe’s tank industry.

With the audit logjam broken, the window for a summer listing is open. The bank consortium can now launch formal pre-marketing. Should any last-minute hitch emerge, an alternative window in September 2026 has been identified, but management is confident it will not be needed. On the operational side, the company has added 5,000 staff since 2023 and is in talks to lease part of the Ludwigsfelde plant, with an eye to a full takeover of the site later. The broader defence IPO market remains mixed — CSG, the Czech ammunition maker, has lost more than half its value since its January debut, and Rheinmetall has retreated from its highs — but KNDS’s order book offers a cushion that few peers can match.