KNDS Secures PwC Sign-Off and Factory Conversions for €20bn Dual Listing

Compliance probe resolved, PwC certifies 2025 accounts, paving way for dual IPO. KNDS targets June/July listing with €33.1bn order backlog and expansion into former auto plants.

A compliance investigation that threatened to derail KNDS’s planned dual listing in Frankfurt and Paris has been resolved without consequences, clearing the path for a summer IPO. The audit firm PwC had refused to certify the 2025 financial statements until law firm Freshfields delivered its final report on a €1.89bn armoured vehicle deal with Qatar from 2013. That report found no evidence of wrongdoing against current or former employees, allowing PwC to give the green light. Without a clean audit opinion, the prospectus could not have been approved and the IPO would have been impossible.

The clearance removes the most immediate hurdle for a listing that the German government now describes as “extremely ambitious” for June or July 2026. A fallback window later in the year remains available if the certified accounts are not ready in time. The consortium of banks managing the offering — Bank of America, Deutsche Bank, Goldman Sachs and Société Générale — are targeting the summer dates.

KNDS is simultaneously ramping up its industrial footprint in an unusual way: turning idle automotive plants into armoured vehicle production lines. CEO Jean-Paul Alary confirmed talks with Volkswagen and Mercedes-Benz in late May over facilities in Osnabrück and Ludwigsfelde. At the Mercedes site near Berlin, a shared model is planned where Sprinter vans continue production alongside Boxer wheeled armoured vehicles. Around 2,000 workers could switch employers, with Mercedes shifting its chassis production to Poland by 2030. The situation in Osnabrück is more complex, as Israel’s Rafael Advanced Defense Systems has already signed a letter of intent to use the Volkswagen plant, setting up a potential competition for the site. KNDS is investing roughly €1bn overall in additional capacity.

The expansion is driven by a surge in demand that has pushed the order backlog to a record €33.1bn, up from €23.5bn. New orders in 2025 alone totalled €13.5bn. Revenue rose 15.9% to €4.4bn, and operating profit climbed to €661m from €500m, lifting the EBIT margin from 13.2% to 15.0%. All three segments — Land Systems Deutschland, Land Systems France and Munition — grew by double digits, with ammunition leading at 24.7%. KNDS has guided for 20% revenue growth in the current year.

To keep pace, the group has opened a new production site in Levanger, Norway, which from the third quarter of 2026 will be able to manufacture up to 36 Leopard 2A8NO tanks annually. A new 155mm artillery ammunition line is already running in Belgium. Headcount has grown 7.3% to around 11,000 employees.

The ownership structure is unusually concentrated for a listed company. Germany will take a 40% stake through KfW, mirroring France’s existing 50% holding. After the IPO, France’s stake will fall to 40%, leaving only about 20% of shares in free float. Berlin has committed to reducing its holding to 30% within two to three years after listing, buying back the shares at the issue price without a premium. The valuation expectations have been scaled back from as high as €25bn to a range of €18bn to €20bn. KNDS aims to raise roughly €5bn, representing about a quarter of equity.

Beyond Europe, the company is pursuing a bid with Leonardo DRS for the U.S. Army’s “Mobile Tactical Cannon” programme to modernise howitzers. A prototype winner could be selected as early as July 2026, which would mark a breakthrough into the Pentagon’s procurement pipeline.

For institutional investors, the thin free float and the remaining governance overhang from the compliance probe are likely to feature in pricing discussions. The IPO will test whether the market is prepared to finance the expansion of a state-dominated defence company with limited daily liquidity — even one that has just cleared its last audit obstacle.