KNDS Faces May Audit Deadline as €1bn Factory Conversion and Berlin Stake Debate Complicate Summer IPO

German-French defence group KNDS races to secure PwC audit by May-end for summer IPO, while converting auto plants and facing valuation drop to €18-20bn.

The countdown is on for KNDS. With the end of May looming, the German-French defence group must secure a signed audit from PricewaterhouseCoopers or watch its summer IPO slip into the autumn window. The delay stems from a lingering probe into a €1.9bn Qatari contract from 2013, with law firm Freshfields still sifting through allegations of multi-million-euro commission payments. PwC has yet to certify the 2025 accounts, and without that document, no prospectus can be filed.

The audit impasse is only one of three fronts on which KNDS is scrambling. To feed a €23.5bn order backlog, the company is moving to convert former automotive plants into military production lines. Negotiations with Mercedes-Benz over its site in Ludwigsfelde, Brandenburg, are at an advanced stage. KNDS plans to lease parts of the facility initially, then buy it outright, bringing around 2,000 workers under its roof. The conversion will cost roughly €1bn, with new assembly lines for armoured vehicles running alongside Mercedes vans during a transition period.

A second potential prize is the Volkswagen plant in Osnabrück, where production is due to end in 2027. But KNDS faces competition: Israeli defence firm Rafael Advanced Defense Systems signed a letter of intent for the site in April. VW CEO Oliver Blume has confirmed advanced talks with multiple defence companies.

The capacity push is driven by a surge in orders. Last year KNDS booked revenue of €3.8bn, a fraction of its backlog. Recent wins include a British contract for 72 wheeled howitzers worth nearly £1bn, secured in mid-May. Deliveries of upgraded Panzerhaubitzen to the Bundeswehr began this month, and more than 100 Leopard 2 tanks are moving through production. A new assembly line for the Boxer armoured vehicle has just opened in Munich-Allach.

All of this forms the backdrop to a planned dual listing in Paris and Frankfurt, underwritten by Goldman Sachs and Deutsche Bank. The company aims to raise around €5bn by selling roughly a quarter of its shares. But the valuation has taken a hit. Bankers now peg KNDS at €18bn to €20bn, down from earlier estimates of as high as €25bn.

Political wrangling adds another layer of uncertainty. Berlin is split over how big a stake the state should take. The defence and finance ministries want 40%; the economics ministry and Chancellor Friedrich Merz favour 30%, which under Dutch law is enough for a blocking minority. Merz has ruled out any state investment after the IPO. CEO Jean-Paul Alary has pushed back against suggestions to delay the listing until 2026, insisting preparations remain on schedule. If PwC does not deliver the audit by the end of May, the IPO will inevitably shift to what is expected to be a more turbulent autumn quarter.