KNDS Lands £1bn UK Howitzer Deal as IPO Prep Navigates State Ownership Constraints

KNDS wins near-£1 billion contract for 72 RCH 155 howitzers with British Army, as its IPO valuation settles at €18-20bn amid thin free float and strong financials.

A near-billion-pound contract to supply 72 remote-controlled howitzers to the British Army has handed KNDS its calling card for the Eurosatory defence exhibition in Paris. The deal, awarded by OCCAR in May 2026 and executed through ARTEC GmbH — a joint venture with Rheinmetall — will see the RCH 155 system replace the ageing AS-90 howitzers that have served since 1992. First deliveries are slated for 2028, with an initial operational capability expected before the decade is out.

The industrial footprint is significant. KNDS UK will build the Boxer chassis in Stockport, while Rheinmetall creates 100 jobs in Telford. Another 100 positions in Stockport and 300 across the British supply chain bring the total employment effect to 500. According to the UK Ministry of Defence, the RCH 155 can fire eight rounds per minute at targets up to 70 kilometres away.

Yet the timing of this export win coincides with a more delicate exercise: KNDS’s initial public offering, targeting a dual listing in Frankfurt and Paris. The valuation range has settled at €18bn to €20bn, well shy of the €25bn figure that circulated earlier. A critical condition was satisfied on 2 June, when a joint internal and external compliance review of a 2013 Leopard 2 and PzH 2000 contract with Qatar concluded without any finding of wrongdoing. That clearance allowed PwC to certify KNDS’s 2025 financial statements — a green light the IPO could not proceed without.

The ownership structure remains the most contentious point for potential investors. Germany will buy the founding families’ stakes at the IPO price via the state-owned KfW, taking its holding to 40% alongside France’s matching 40% share. That leaves just 20% of shares freely tradable at launch — an unusually thin free float for an industrial company of this heft. Berlin plans to pare its stake to 30% over two to three years, but for now institutional investors face limited influence. Analysts have flagged the need for a valuation discount to reflect minority-shareholder powerlessness.

KNDS’s operating metrics provide ample counterweight. Revenue rose nearly 16% to €4.4bn in 2025, while operating profit jumped from €500mn to €661mn, pushing the EBIT margin from 13.2% to 15%. The order backlog swelled to €33.1bn from €23.5bn a year earlier, powered by €13.5bn in new orders during 2025 alone. Among the highlights: more than 300 Leopard 2A8 tanks for the Czech Republic, the Netherlands and Croatia.

Capacity expansion is keeping pace. KNDS is investing roughly €1bn in new production facilities, and CEO Jean-Paul Alary confirmed talks with Volkswagen and Mercedes-Benz about taking over mothballed plants in Osnabrück and Ludwigsfelde. In Norway, a new plant in Levanger built with local specialist RITEK in just 18 months will produce up to 36 Leopard 2A8 tanks annually — 37 of the 54 vehicles ordered by the Norwegian armed forces will roll off that line. On the balance sheet, KNDS shed around 5.8% of its stake in driveline supplier RENK via an accelerated bookbuild in May, retaining roughly 10% subject to a 180-day lock-up expiring in November.

The pipeline extends beyond Europe. In early June, American Rheinmetall and KNDS jointly proposed the RCH 155 solution for the US Army’s Mobile Tactical Cannon programme, placing the company inside the Pentagon’s modernisation plans. At the CANSEC show in Ottawa, General Dynamics Land Systems–Canada unveiled the Grizzly LAV 155mm, pairing KNDS’s howitzer turret with a modified LAV 6.0 chassis in a bid for Canada’s indirect fire support programme.

Two joint ventures add further depth. EuroPuls, a partnership with Israel’s Elbit Systems, produces rocket artillery for European forces — Germany alone plans roughly 500 MARS-3 launchers on this platform. EuroTrophy, a consortium with Rafael and General Dynamics, equips armoured vehicles with active protection systems; around 200 vehicles, including the Leopard 2A8 for Germany and Norway, are already being fitted. The longer-term question mark hangs over the Main Ground Combat System (MGCS), the Franco-German next-generation tank programme. With the FCAS air combat system scrapped, market observers watch MGCS closely. KNDS is a central player but also participates in Germany’s MARTE programme, which groups 12 European nations without France. How the company reconciles these rival national priorities ahead of its IPO remains a puzzle that Eurosatory 2026 is unlikely to fully resolve.

The Paris gathering offers KNDS five days of high-level face time with NATO procurement chiefs from across Europe. The real persuasion begins after the exhibition, when roadshow meetings with fund managers will decide whether a defence contractor under dual state control can command the risk-return profile of a classic industrial stock.