KNDS Secures €269m From Renk and 40% State Stake as IPO Hinges on Auditor’s Sign-Off

KNDS secures €269m from Renk stake sale and political deal giving Germany 40% stake, but IPO timeline hinges on PwC's clean audit for 2025 accounts.

KNDS has pulled off two critical manoeuvres in the run-up to its planned summer listing — a €269m cash injection from trimming its Renk holding and a political deal that hands Berlin a 40% stake and sees off a rival suitor. Yet the final timetable still depends on a single piece of paper: the auditor’s clean opinion on the 2025 accounts.

The German defence group placed 5.8 million Renk shares at €44.95 each through an accelerated bookbuild on 19 May, targeting institutional investors. The sale reduces KNDS’s interest in the Augsburg-based gearbox supplier to around 10%. KNDS, which had built up the position around Renk’s own flotation in 2024, said it intends to remain a long-term shareholder. The proceeds will help fund capacity expansion as its order book swells.

That backlog stood at €23.5 billion at the end of last year, supported by orders for RCH 155 wheeled howitzers from the British army and Leopard 2A8 tanks from several European states. Revenue climbed 17% to €3.8 billion in 2024.

The political front also cleared last week. Germany will take a 40% stake in the armoured-vehicle maker when it floats, matching the holding planned for France. The decision resolves weeks of infighting within the Berlin coalition, where the defence ministry had pushed for a larger slice than the 30% favoured by the chancellery and the economy ministry. In the end, the 40% figure prevailed — enough for a blocking minority even under Dutch corporate law, where a 30% stake would also have sufficed.

KNDS chairman Tom Enders welcomed the clarity but stressed that the combined 80% state ownership should be temporary. Under the current framework, both governments are expected to reduce their holdings to 30% within two to three years, while retaining equal voting rights to protect jobs and production sites.

The state’s move also blocked an unsolicited all-cash offer from Czech rival CSG, which had approached the German founding families Wegmann and Bode on 13 May. The families rejected the bid, preferring both the IPO and a sale to the German government.

Auditor holds the key

Despite the political progress, the listing cannot proceed until PwC issues a clean audit certificate for the 2025 annual accounts. The accounting firm is currently withholding its sign-off pending the final report of a law firm probe into a 2013 arms deal with Qatar, involving howitzers and Leopard 2 tanks worth nearly €1.9 billion. Freshfields, the firm conducting the review, has so far found no evidence of criminal conduct. But without the certificate, KNDS cannot publish a securities prospectus — a prerequisite for the float.

If PwC delivers the certificate by the end of May, the dual listing in Frankfurt and Paris could take place in June or July. Around a quarter of the shares are expected to enter free float. A delay beyond May would push the IPO to the autumn.

The market backdrop has also cooled. Banks advising on the transaction have trimmed their valuation expectations to €18 billion to €20 billion, down from earlier estimates of as much as €25 billion. The broader European defence sector has lost ground since the start of the year, with heavyweights such as Rheinmetall suffering notable corrections. Still, KNDS’s operational performance and multi-billion-euro order pipeline provide a fundamental counterweight — provided the auditor clears the way in time.