A European defence heavyweight is heading for the public markets with an order book that would make most industrial companies envious, yet its financial outlook is anything but straightforward. KNDS, the tank and artillery specialist behind the Leopard and Caesar platforms, will launch a dual listing in Paris and Frankfurt in mid-July — but only institutional investors need apply. The existing owners are selling up to 20% of their shares, and no new equity is being issued, meaning the float is purely a secondary sale.
The share sale arrives during a testing period for Europe’s defence sector. After a blistering run, stocks have retreated sharply in recent months as investors question how quickly the continent’s rearmament pledges will translate into sustainable profit growth. Rheinmetall, KNDS’s biggest rival, has already lost roughly a quarter of its market value this year. Reports suggest Rheinmetall had explored buying into KNDS, only to be blocked by the French and German governments.
What sets the KNDS listing apart is the governance architecture. Post-IPO, the French state — via its holding GIAT Industries — and the German government, represented by the state development bank KfW, will each own exactly 40%. A 10-year lock-up prevents either side from pushing its stake below 30% without the other’s consent. Berlin also retains a golden share in the German subsidiary, giving it veto power over strategic decisions. Minority shareholders who hold their paper for two years are rewarded with double voting rights. The supervisory board will expand to 12 members: six representing the two state shareholders, five independent directors and the chief executive.
Financially, KNDS enters this new chapter with momentum. Revenue in 2025 reached €4.4bn, a 16% increase on the prior year, while EBIT came in at €661m, generating a margin of 15%. Free cash flow was even stronger at €980m. The order backlog has swollen to a record €33.1bn, an addition of almost €10bn in a single year — a level of visibility few industrial groups can match.
Should investors sell immediately? Or is it worth buying KNDS?
But the top-line picture masks a near-term headwind. Management is guiding for roughly 30% revenue growth in 2026, yet the operating margin is expected to shrink to about 12% as KNDS ramps up large national defence programmes at the same time as some extremely profitable legacy contracts roll off. The thickest growth lever will be KNDS Land Systems Germany, whose sales are forecast to roughly triple versus 2025. The longer-term target is to restore margins to 14–15% on annual revenue of €11–12bn.
Dividends are pencilled in for 2027, with a payout ratio of 40% of net profit, based on the 2026 financial year. Chief executive Jean-Paul Alary has confirmed the company intends to reward patience — both through the enhanced voting rights for long-term holders and through the eventual distribution of cash.
The valuation is expected to land somewhere between €12bn and €15bn, according to media reports, which would make this one of the largest defence listings in Europe in recent years. The bank syndicate handling the offering packs considerable firepower: BofA, Deutsche Bank, Goldman Sachs and Société Générale are acting as global coordinators. Whether that translates into successful pricing depends on how institutional appetite holds up between now and the order book being closed. The mid-July debut will be a real test of the market’s faith in the European defence story — especially when its best-known champion is simultaneously nursing a double-digit share decline.
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