KNDS Aims for €15bn Float with State-Heavy Governance and a Record €33bn Backlog

The defence sector’s summer spotlight is shifting to Paris and Frankfurt, where KNDS is preparing one of Europe’s largest initial public offerings in years. But the listing comes with an unusual twist: the French and German governments are locking themselves into the equity base for a full decade, leaving only a sliver of shares for outside investors.

The valuation range for the tank maker is set between €15bn and €18bn, with the free float capped at 20%. That pool will be reserved exclusively for institutional buyers — retail investors have no chance to subscribe. Bank of America, Deutsche Bank, Goldman Sachs and Société Générale are managing the transaction, and order books are scheduled to close in mid-July, with the first trading day pencilled in for July 13.

A decade of mutual vetoes

The ownership structure is designed to ensure strategic control remains in state hands. The French government, via the holding GIAT Industries, will own 40% of KNDS after the IPO. The German state, through KfW, will also hold 40% — a stake it is buying directly from the Wegmann family, which is exiting after 144 years of ownership. That purchase still requires approval from the German parliament’s budget committee.

Both state shareholders have agreed not to reduce their holdings below 30% for ten years without the other’s consent. The supervisory board will comprise twelve members, with three each appointed by GIAT and KfW, and voting rights capped contractually to prevent either side from dominating. To encourage long-term institutional holding, investors who keep their shares for at least two years will receive double voting rights.

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“Germany’s entry is a strong confidence signal in KNDS and its future,” said chairman Tom Enders.

Strong numbers, but a margin squeeze ahead

KNDS enters the market with a record order backlog of €33.1bn — more than seven times last year’s revenue. In 2025, the group generated sales of €4.4bn, an operating profit of €661m (a 15% EBIT margin), and free cash flow of €980m.

The outlook for 2026 is more muted on margins, even as the top line accelerates. Management forecasts revenue growth of roughly 30%, driven largely by the ramp-up of major national programmes, particularly in Germany. However, the company warns that the EBIT margin will fall to around 12%, as the initial phases of these contracts weigh on profitability and a batch of exceptionally lucrative prior-year deals rolls off. Medium-term revenue targets stand at between €11bn and €12bn annually.

Shareholders can expect their first dividend in 2027 for the 2026 financial year, with a payout ratio of roughly 40% of net profit.

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A chilly market and a blocked rival

The IPO is proceeding against a backdrop of significant sectoral headwinds. European defence stocks have retreated sharply this year as investors question how quickly state spending pledges will translate into earnings. KNDS’s Düsseldorf-based rival Rheinmetall has lost about a quarter of its market value in 2025.

In a further sign of the politically charged environment, Rheinmetall reportedly attempted to acquire a stake in KNDS but was blocked by the two governments. The incident underscores the degree to which the company’s future will remain tethered to Franco-German state interests, even as it opens its doors to public capital.

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