KNDS Guns for €20bn IPO with Backlog Swelling to €33bn, but State Hold and Factory Limits Give Investors Pause

Defense contractor KNDS targets Frankfurt/Paris listing with €18-20bn valuation, but state ownership limiting free float to 20% may deter investors despite record €33bn order book.

KNDS is heading toward a 2026 dual listing in Frankfurt and Paris with a valuation now expected to land between €18bn and €20bn — a sharp downward revision from the €25bn initially floated by its underwriting banks. The defense contractor has plenty of operational tailwind: a record order book, a fresh UK artillery contract, and a pipeline into North America. Yet the equity story is complicated by a dominant state ownership structure that could deter institutional investors.

The most tangible recent catalyst is the British Army’s order for 72 RCH 155 self-propelled howitzers, placed through the OCCAR procurement agency and worth nearly £1bn. Deliveries are scheduled to begin in 2028, with production taking place at KNDS UK’s Stockport facility and at Rheinmetall’s Telford plant. The program is expected to create around 500 jobs: 100 at each KNDS and Rheinmetall site, plus 300 across the British supply chain. The RCH 155 — a fully automated 155mm system capable of firing over eight rounds per minute out to 54 km — is also being offered for the U.S. Army’s Mobile Tactical Cannon program in partnership with American Rheinmetall, and in Canada through General Dynamics Land Systems–Canada’s Grizzly LAV 155 proposal, for which KNDS supplies the gun.

These artillery opportunities add to an already hefty backlog. KNDS ended 2025 with €33.1bn in orders on the books, up from €23.5bn a year earlier. New orders worth €13.5bn were won in 2025 alone, including more than 300 Leopard 2A8 tanks for the Czech Republic, the Netherlands and Croatia, plus additional Caesar howitzers. Revenue climbed nearly 16% to €4.4bn, with the German land-systems division contributing €2.5bn, the French division €1.3bn and the munitions business €612m. Operating profit reached €661m, pushing the margin from 13.2% to 15%.

Still, the ownership structure hanging over the IPO is far from market-friendly. The German government plans to take a 40% stake via KfW at the IPO price, with a commitment to reduce its holding to 30% within two to three years. France is expected to match that 40% level on its side, leaving only 20% of the shares in free float. That thin float has already prompted analysts to demand a valuation discount, arguing that minority shareholders will have limited control. KNDS supervisory board chair Tom Enders has acknowledged the tension, publicly pushing for a longer-term withdrawal of state ownership.

Capacity constraints are another worry. CEO Jean-Paul Alary confirmed late in May that KNDS is in talks with Volkswagen and Mercedes-Benz about converting former auto plants into defense production facilities. The most advanced discussions involve a Mercedes site near Berlin in Ludwigsfelde, where Sprinter vans could keep running on one line while Boxer armored vehicles are assembled on another. Talks with Volkswagen over a plant in Osnabrück continue, and VW chief Oliver Blume has called the negotiations "promising." The urgency is clear: the company must turn its ballooning order book into actual deliveries, and existing plants are running hard.

The IPO banks — Bank of America, Deutsche Bank, Goldman Sachs and Société Générale — have responded by trimming the valuation range to between €18bn and €20bn, with June or July now seen as the preferred window and September as a backup. Before that, the market will watch for the official securities prospectus, which alone will provide binding details on lock-up periods and the precise shareholder structure. Until then, KNDS remains a pricing puzzle: strong industrial momentum weighed against a governance model that gives states the driving seat.