Factory Deals and Audit Troubles: KNDS Nears Dual Listing with a Record €33bn Backlog
03.06.2026 - 20:01:48 | boerse-global.de
The Franco-German defence group KNDS has built up a formidable pipeline of orders, yet the road to its planned dual listing in Frankfurt and Paris remains strewn with obstacles. The company’s order book swelled by nearly a third to €33.1bn last year, after new contracts worth €13.5bn were booked. Revenue climbed 15.9% to €4.4bn, driven by a 24.7% surge in its munitions division and a 17.4% jump in its German land systems business, which alone generated €2.5bn.
But the company must navigate two simultaneous challenges before investors can buy shares: a disagreement over the state’s stake through the KfW development bank and a lingering audit issue dating back more than a decade.
Paint drying on the factory floor
Instead of building new production sites from scratch, KNDS is seeking to repurpose dormant automotive capacity. The group confirmed on 26 May that it is in talks with Mercedes-Benz to take over its Ludwigsfelde plant, including all 2,000 employees. The plan initially involves leasing part of the site while military vehicles are assembled alongside Mercedes vans.
The situation in Osnabrück is more convoluted. Volkswagen intends to phase out passenger car production there by 2027, but Israeli defence firm Rafael Advanced Defense Systems has already signed a letter of intent for the premises. KNDS is therefore not the only suitor. The group is earmarking roughly €1bn for new manufacturing capacity overall.
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Additional capacity is coming on stream elsewhere. A new Norwegian facility in Levanger will start rolling out up to 36 Leopard 2A8NO tanks per year from the third quarter of 2026. A production line for 155mm ammunition has already been activated in Belgium. And last week, the joint venture EuroPuls — set up on a 50:50 basis with Elbit Systems in Kassel — reported a new state of readiness. Germany is weighing an order for roughly 500 MARS-3 rocket launchers, exactly the system EuroPuls produces.
The state ownership conundrum
Germany wants the state-owned KfW to take a 40% stake in KNDS, mirroring the existing French government holding. That would leave only 20% of the shares freely tradable after the IPO. With a valuation estimated at €18bn to €20bn, the free float would be thin — enough to hamper index inclusion and limit trading liquidity.
The political wrangling over the timing and structure of the KfW stake could still delay the listing. If resolved swiftly, a first quotation in Frankfurt and Paris might come as early as summer 2026. Should negotiations drag on, September of that year is the back-up window. By the end of 2026, management insists, the IPO will be completed.
A test from 2013
The second hurdle is a compliance review that has yet to secure the auditor’s blessing. PwC has refused to sign off on the 2025 annual report because it is waiting for the final assessment from law firm Freshfields, which is investigating a 2013 contract with Qatar’s armed forces worth €1.89bn. The deal covered 24 PzH 2000 howitzers, 62 Leopard 2 tanks and other equipment.
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KNDS has stated that the probe is “sufficiently advanced” to allow the audit to be concluded, and that no evidence of criminal conduct by current or former employees has emerged so far. But the investigation is not yet formally closed. That ambiguity forces market participants to ask not if the IPO will happen, but what governance discount they should apply.
Betting on European defence
With a record backlog, a string of new production lines and a strategic joint venture in rocket artillery, KNDS ticks many boxes for equity investors eyeing the ramp-up in European defence spending. But the combination of a controlling state shareholder, a narrow free float and a still-incomplete compliance review means the IPO will test the market’s appetite for the sector’s structural growth against its political and regulatory complexities. The prospectus, due to be published in the months ahead, will have to provide the answers.
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