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Tankmaker KNDS is struggling to convince investors to back its planned stock market listing at a valuation of more than €12bn, raising the prospect that the blockbuster flotation could be delayed.
Some investors have told KNDS in preliminary talks this week that they believe the Franco-German group will be worth less than €12bn in an initial public offering planned for July, according to people familiar with the matter.
KNDS’s key German family shareholder, which owns 50 per cent with the French government holding the rest, has made clear that it will not proceed with an IPO at a valuation below €12.5bn, some of the people said. A valuation of between €18bn and €20bn had been discussed earlier this year.
Meetings with investors are due to continue next week but unless the company and its advisers conclude there is demand for shares at the desired valuation the company may postpone the IPO until later this year or beyond, they added.
A final decision on the IPO, which would be one of the biggest in Europe in recent years, is likely to be made next week after further talks with investors, the people said.
KNDS and its advisers are still hoping that enough investors will back a flotation at the desired price, the people said, noting that investors are incentivised to push for low prices in pre-IPO talks and could yet commit to invest at a higher valuation.
The Amsterdam-based company in May announced a record backlog of more than €33bn for 2025, driven by increased spending by the region’s governments, and a listing would offer exposure to the European defence sector.
KNDS and a spokesperson for the German families that own half of the company declined to comment.
But the years-long euphoria around European arms makers has cooled in recent months amid concerns about the future of warfare swinging away from heavy machinery towards cheaper drones as well as production bottlenecks and profit-taking, according to analysts.
The Stoxx Targeted Defence index, tracking Europe’s biggest listed defence groups, is flat for 2026 despite a strong start to the year.
The decline in recent months was exacerbated last week when Germany scrapped a multibillion-euro warship project, sending shares in the country’s biggest defence group Rheinmetall down almost a fifth. Rheinmetall had been expected to take over as the main contractor and had negotiated a price tag of €15bn for leading the scheme.
The cancellation of the warship project came on the same day that KNDS formally launched its long-awaited stock market listing, triggering exasperation at the company and its advisers with people close to the IPO process complaining of a lack of co-ordination in Berlin. The “right hand doesn’t know what the left hand is doing”, they said.
“This is the perfect storm,” said one person on the deal. “People are very jittery about the sector.”
Even before the German government’s decision to scrap the order, the expected valuation range for KNDS, which makes the Leopard tank, had declined to €12bn-€15bn from the previous range of €18bn-€20bn, according to people familiar with the matter.
Rheinmetall shares, which are expected to be a key reference point for investors when putting a valuation on KNDS, have declined about 38 per cent this year, including last week’s drop.
Despite the different business models — the Franco-German company focuses on land-based vehicles whereas Rheinmetall is more diversified — many investors have lowered their price points as a result, said advisers.
Potential investors in KNDS have also told the company’s bankers they are concerned about the lack of clarity related to the German government’s massive future order for the Boxer, an armoured vehicle jointly built by KNDS and Rheinmetall, which will play a big role in the long-term order book for both companies.
The German family behind KNDS reached an agreement this month to sell a 40 per cent stake to the German government, paving the way for a long-awaited IPO after which Paris and Berlin would hold 40 per cent each with the rest in public hands.
As part of the deal, Berlin agreed to pay a premium to the listing price, which is usually at a discount to the valuation that can be achieved in a private sale, and to make a potential extra payment depending on the share performance after the listing.
