KNDS IPO Stall Draws Green Party Fire Over 'Greedy' Owners and Missed Market Window

Tank builder KNDS's float scuttled by €500M gap between owners and buyers; political backlash in Berlin as company's operational strength persists with €33B orders.

The scuppered float of tank builder KNDS has ignited a political storm in Berlin, with the Green party's budget spokesman branding the delay a "disaster for the federal government." He accused the warring owner families of greed, saying they refused to settle for the billions already on the table, while the government itself lacked a coherent industrial strategy. The criticism is aimed squarely at the timing: talks between the economy ministry and the families dragged into June, squandering a favourable window for the listing and forcing a last-minute postponement just a week before the planned debut.

Behind the official excuse of market volatility lies a raw valuation dispute. Owners Giat Industries of France and Germany's Wegmann & Co. are demanding at least €12.5 billion for the equity, but large institutional buyers refuse to pay more than €12 billion — a gap of roughly half a billion euros that has frozen the entire process. Earlier this year the management had hoped for as much as €20 billion, later lowering ambitions to €15 billion as the defence-stock rally faded. Bankers considered €15 billion realistic a few months ago, but the market's mood has soured sharply since then.

The deadlock has also shelved Berlin's plan to take a direct stake via state lender KfW, a transaction that was tied to the IPO price. The government had pencilled in a €7.2 billion outlay based on a valuation above €18 billion, a calculation now obsolete. Cabinet officials insist the goal remains unchanged but acknowledge that the listing must come first.

Operationally, however, KNDS is showing no sign of pause. The company has just awarded a contract worth more than €11 million to Finnish electronics firm Incap for cable harnesses and electromechanical assemblies destined for the Leopard tank programme. The parts will be manufactured at several Incap sites and delivered over three years. The award underscores the group's autonomy from capital-market drama: its order book has swollen to over €33 billion, fuelled by the Bundeswehr's plan to buy up to 1,000 Leopard 2s and 2,500 Boxer armoured vehicles — a package valued at roughly €25 billion.

To handle that pipeline, KNDS is expanding capacity. The core Munich plant currently turns out around 50 tanks a year, with delivery lead times of about two years. An ex-Alstom factory in Görlitz has been acquired, and production there is scheduled to start in 2026. Financially, the company is solid: free cash flow hit €980 million last fiscal year, revenue climbed to €4.4 billion, and operating profit reached €661 million.

Yet the wider defence sector is under pressure. The Czechoslovak Group, which went public in Amsterdam only in January, has lost 44% of its value, its market cap falling to €13.8 billion. Rheinmetall, the sector heavyweight, shed 13% over the past month. Morningstar analyst Michael Field sees no fresh IPO attempt before year-end and argues the entire industry needs a run of strong quarterly results to rebuild investor trust.

Some observers pin the blame on Berlin's hesitant approach. The budget committee only approved the transaction on June 26, and the drawn-out political process allowed market conditions to deteriorate. Meanwhile, the mere prospect of a state stake is being viewed by some investors as a drag on valuation, despite the bulging order book. A new attempt is not expected before September, and whether the valuation gap can be closed by then hinges on both sector momentum and political resolve in the capital.