By Emma-Victoria Farr
FRANKFURT (Reuters) -Military defence system supplier KNDS is considering an initial public offering (IPO) as early as the end of the year, two people familiar with the matter told Reuters, as Europe’s bid to increase defence triggers a rally in the sector.
The Franco-German company has held early stage talks with advisers about a possible listing in late 2025 or in 2026, potentially in Frankfurt, the sources said, speaking on condition of anonymity.
Banks have yet to be appointed, they added.
The French state shareholding agency (APE) declined to comment. KNDS and its German family shareholder Wegmann-Gruppe did not respond immediately to requests for comment.
The talks come amid a rebound in defence sector stocks after U.S. President Donald Trump said Europe would need to significantly step up military resources.
Europe’s biggest ammunition maker Rheinmetall along with Germany’s Hensoldt led gains this week after the U.S. told Europe’s political leaders they needed to increase military budgets. Since Russia’s invasion of Ukraine, Rheinmetall has soared in value to be worth about 39 billion euros ($40.87 billion), compared with 4 billion euros in February 2022.
KNDS was formed in 2015 during the military land systems merger of German family-owned Krauss-Maffei Wegmann (KMW) – famous for making Leopard tanks – and French state-owned weapons provider Nexter. The German family and French government remain joint shareholders, according to its website. The company’s complex shareholder base could mean that the business only floats a small proportion of shares, enabling its family and state backers to retain controlling stakes, one of the people suggested, cautioning that the business may also decide against listing as a public company. It was not clear at the time of publishing which of the shareholders would decide to sell shares in the event of an IPO or what valuation the company might seek. World defence companies trade at 25.8 times expected earnings, versus 18 times three years ago, according to LSEG Datastream data on February 20. Iveco and Thyssenkrupp both trade around 8 times on the same valuation metric. KNDS, which welcomes new chief executive Jean-Paul Alary in April, produces battle tanks, armoured vehicles, artillery systems, weapons stations, ammunition and military bridges, as well as battle management systems, and training and protection solutions. It generated 3.3 billion euros ($3.45 billion) in revenue during the fiscal year 2023, according to its website. German gearbox maker Renk, in which KNDS is an investor, listed last year with a valuation of 2.15 billion euros and had sales of 1.1 billion euros in 2024 based on its preliminary results. KNDS last week increased its holding in Augsburg-based Renk to 25.1%, which has seen its shares rise 62% since its stock market debut a year ago. KNDS is incorporated in the Netherlands and has about 9,500 employees globally. It supplies armies across the world, with production lines in France and Germany and various industrial partnerships, according to its website.
($1 = 0.9543 euros)
(Reporting by Emma-Victoria Farr, additional reporting by Mathieu Rosemain, editing by Anousha Sakoui and Elaine Hardcastle)
