KNDS IPO: Tank Orders Outstrip Capacity, Car Plants to Fill Gap as €15bn Float Nears

Franco-German defence group KNDS plans July IPO with €33.1bn orders, turns to Volkswagen and Mercedes factories to tackle tank production bottlenecks. Valuation €12-15bn.

The Franco-German defence group KNDS is heading for a July market debut with a record €33.1bn order book, but the company faces a problem most industrial rivals would envy: it cannot build tanks fast enough. To bridge the gap, management has turned to Volkswagen and Mercedes-Benz, eyeing former car plants to churn out armoured vehicles alongside passenger vans.

CEO Jean-Paul Alary confirmed in late May that talks are underway to take over factories in Osnabrück and Ludwigsfelde. At the Mercedes site in Berlin, production of Sprinter vans and Boxer wheeled armoured personnel carriers would initially run in parallel, with KNDS later assuming full control. Around 2,000 employees would transfer as a result. The move underscores the sheer scale of KNDS's capacity crunch: annual demand for its Boxer system alone is expected to rise sixfold by 2030 under a strategic partnership with the Dräxlmaier Group.

KNDS is also expanding its own sites. A new production line for the Boxer has been commissioned in Munich-Allach, and a facility in Levanger, Norway, began operations in May, capable of delivering up to 36 Leopard tanks annually from the third quarter of 2026. New products debuted at the Eurosatory 2026 trade fair — the CAPINT main battle tank, mating a Leopard 2 A8 chassis with an ASCALON turret, and the LORAS artillery system with a range exceeding 60 kilometres — signal a long-term pipeline that will test these expanded facilities.

The IPO itself is set for the week of 13 July, with simultaneous listings in Paris and Frankfurt. Up to 20% of shares will change hands, sold exclusively to institutional investors by existing stakeholders — including the Wegmann family, which ends a 144-year involvement. The German state, via KfW, will acquire a 40% stake for up to €7.2bn, matching France's holding through GIAT Industries. Both governments have committed to a ten-year lock-up and retain mutual veto rights. No new capital flows to KNDS; the entire transaction is a secondary sale.

KNDS enters the public markets with formidable financial momentum. The order book of €33.1bn at the end of 2025 represented more than seven times the previous year's revenue of €4.4bn, which grew 16%. Operating profit reached €661m, free cash flow €980m, and the operating margin stood at a robust 15%. For 2026, management targets revenue of around €5.7bn, though the margin is expected to slip to roughly 12% as the group ramps up large national programmes and high-margin legacy contracts wind down. Medium-term ambitions call for revenue of €11bn to €12bn and a margin of 14%–15%.

Shareholders can expect a first dividend in 2027, with a targeted payout ratio of about 40%. Those who hold their stock for at least two years will be granted double voting rights, a structure designed to encourage long-term commitment alongside the state anchor investors.

The valuation is projected between €12bn and €15bn, with a banking syndicate led by Goldman Sachs and Deutsche Bank managing the float. However, the market backdrop has grown more cautious. European defence stocks have corrected sharply in recent months, and direct rival Rheinmetall has lost roughly a quarter of its market capitalisation this year. Investors are increasingly questioning how quickly government defence spending will translate into orders. KNDS now must convince the market that its aggressive industrial expansion can deliver on the record backlog — and that the car plants it hopes to inherit will be rolling out tanks before the first dividend arrives.