Franco-German defence giant delays IPO amid market uncertainty Future of planned German state-purchase of shares uncertain

Franco-German defence manufacturer KNDS has postponed its planned stock market listing indefinitely which had been set to enable the German government to take a 40% stake in the company. The ongoing ongoing volatility in Europe’s defence sector was listed as the main concern behind this decision.

In a statement released on July 1 cited by Reuters, the company said its shareholders had expressed “their intention to resume the Initial Public Offering (“IPO”) process upon the return of more favourable market conditions.”

KNDS added that it has already “completed substantially all required preparation phases” for the proposed listing, which was expected to take place on stock exchanges in Frankfurt and Paris.

The company, known for producing the Leopard 2 main battle tank and other armoured vehicles, said it would continue to monitor capital markets and restart the IPO process when conditions improve.

Before the postponement, the multi-billion-euro listing had been expected as early as June, according to Bloomberg. As part of preparations for the IPO, France and Germany recently finalized an agreement positioning both countries as equal shareholders in the defence group by France reducing its stake down to 40% while Germany would increase it to this figure. This  move was described by officials as a step toward strengthening “common sovereignty in land defence.”

KNDS did not detail the specific concerns behind the delay, but recent developments across Europe’s defence sector have contributed to market uncertainty. In June, Germany cancelled the multi-billion-euro F126 frigate program, a move that unsettled defence markets.

Following that decision, shares in German defence company Rheinmetall fell sharply, at one point dropping as much as 20%, wiping billions off its market value.

Analysts at Capital Alpha Partners described the previous week as a “rough” period for European defence stocks, pointing to a combination of factors affecting investor sentiment, as Breaking Defence reports. These included US congressional adjustments that reduced funding for the Army’s XM-30 armored vehicle program, as well as reported defence spending restraint in countries such as Italy, which may have weighed on firms including Leonardo and Fincantieri.

KNDS’s delayed listing comes after strong market performance by other European defence firms. Earlier this year, Czech defence group Czechoslovak Group completed a listing on Euronext Amsterdam that valued the company at more than €33 billion.

By Nazrin Sadigova