KNDS struggles to secure investor backing for €12B IPO as governance concerns mount

KNDS, the Franco-German defense powerhouse behind the Leopard 2 and Leclerc tanks, is finding that building investor confidence is harder than building armored vehicles. The company’s planned IPO, set for a dual listing on Euronext Paris and the Frankfurt Stock Exchange, is hitting resistance at valuations above €12B.

That number is a far cry from where things started. Initial expectations pegged the company’s valuation somewhere between €15B and €18B. The current floor of €12B represents a roughly 30% haircut from the upper end of those early projections.

The valuation tug-of-war

On one side, you have potential investors who believe a fair valuation might sit below €12B. On the other, you have Wegmann & Co., one of the existing shareholders, drawing a line in the sand at €12.5B as its minimum acceptable price.

Both the French and German governments are each aiming for a 40% stake in the company after the IPO goes through. Two sovereign states want to collectively control 80% of a publicly traded company while asking private investors to buy in with essentially no say in how the business is run.

Existing shareholders plan to sell up to 20% of share capital through the offering. Crucially, the proceeds from the IPO will go to those selling shareholders, not to KNDS itself. So the company doesn’t even get fresh capital to invest in growth.

The numbers tell a different story than the sentiment

The company posted €4.4B in revenue for 2025, reflecting 16% year-over-year growth. EBIT hit €661 million, translating to a 15% margin.

Then there’s the order backlog: €33.1B as of December 31, 2025. That’s roughly 7.5 years of current revenue already locked in.

KNDS has also set medium-term revenue targets between €11B and €12B annually, which would represent a near-tripling from current levels.

The IPO was officially announced on June 24, 2026, following a board resolution back in December 2025. Trading is anticipated to begin in the first half of July 2026.

What this means for defense investors

The risk for KNDS is a scenario where Wegmann & Co. refuses to sell below €12.5B and investors refuse to buy above €12B. That’s a deal that simply doesn’t get done. A pulled IPO would be embarrassing for the company and potentially damaging for the broader European defense IPO pipeline.

A company with €33.1B in backlog and 15% EBIT margins is attractive at almost any reasonable price. A company where two governments hold 80% of the votes and direct strategy according to geopolitical priorities rather than shareholder returns is a fundamentally different investment, regardless of what the financial statements say.

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