KNDS IPO: US Howitzer Decision Looms Over July Listing as States Cement Dual Control

KNDS, Franco-German tank maker, targets €12-15bn IPO on July 13 in Paris and Frankfurt. Governments will hold 80% stake; US Army howitzer contract decision during subscription period.

The countdown to one of Europe’s biggest defence listings this year is under way, with KNDS set to start trading in Paris and Frankfurt on July 13. But the timing is unusually tight: a US Army contract for up to 500 new howitzers, which the Franco-German tank maker is bidding for alongside Leonardo DRS, is expected to be awarded during the subscription period. A win would hand the consortium a direct entry into the world’s largest defence market and could supercharge demand for the stock.

KNDS is targeting a market capitalisation of between €12bn and €15bn, well below the €25bn figure initially floated. The discount reflects the fact that incoming shareholders will have almost no operational say. The IPO is purely a secondary sale — no new shares are being issued, and every euro raised goes to existing owners. Up to 20% of the equity will change hands. Private investors are excluded entirely.

Governments Tighten Their Grip

Berlin and Paris are using the listing to lock in long-term control. The German state, via KfW, will take a 40% stake at a cost of up to €7.2bn. France, through its holding company GIAT Industries, will also retain 40%. Together the two governments will hold 80% of the tank maker. Both sides are subject to a ten-year lock-up and a mutual veto if either slice falls below 30%. Germany also secures a blocking minority and sweeping veto rights.

The governance framework includes a loyalty programme: shareholders who hold their shares for two years earn double voting rights. That mechanism is designed to discourage short-term churn, but it also reinforces the dominance of the two anchor states.

After 144 years, the German Wegmann family — one of the selling shareholders alongside GIAT — is exiting the business.

Margin Squeeze on the Horizon

KNDS delivered €4.4bn in revenue and €980m in free cash flow in 2025. This year it expects top-line growth of roughly 30%, and medium-term revenue guidance stands at €11bn to €12bn annually. Yet the operating margin is forecast to slip to around 12% in 2026, down from 2025 levels. Management points to start-up costs for major domestic programmes and the roll-off of unusually profitable legacy contracts.

The payout policy aims for roughly 40% of net profit from the 2026 financial year, with the first dividend pencilled in for 2027. The order backlog, already bulging at more than €33bn, provides a solid foundation.

Morningstar chief strategist Michael Field has sounded a cautious note on the wider sector. “Investors doubt whether European governments will actually deliver on their defence promises,” he says. While growing order books support the industry narrative, progress in Ukraine peace talks has temporarily dampened sentiment, he adds.

New Weapons, Old Hurdles

Ahead of the IPO, KNDS showcased two new systems at the Eurosatory defence fair in Paris. The first, CAPINT, is France’s candidate for a next-generation battle tank. It combines an upgraded Leopard 2A8 hull from Munich with an unmanned ASCALON turret from France, firing standard 120mm NATO ammunition. In January 2026 the company conducted the world’s first live-fire dynamic campaign with an ASCALON demonstrator in Portugal, firing around 300 rounds.

The second system, LORAS, is an artillery platform capable of reaching targets at 100 kilometres — more than double the range of conventional howitzers. KNDS also presented a universal drone launch container equipped with jamming systems and AI-controlled combat drones.

Two regulatory hurdles have already been cleared. An internal investigation into an old Qatar-related contract found no evidence of criminal wrongdoing. And the European Commission opened a merger control review in early June, clearing the way for the publication of the securities prospectus.

The US Bet

The howitzer contest with the US Army — pitting KNDS and Leonardo DRS against rivals including Rheinmetall and South Korea’s Hanwha — is the most immediate catalyst. Rheinmetall has already lost a quarter of its market value this year as defence stocks broadly corrected. A KNDS win would not only open the US market but also provide a powerful narrative for the IPO roadshow.

For now, the listing is a pure cash-out for the old guard, with new shareholders buying into a company whose strategic direction remains firmly in the hands of Berlin and Paris.