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Franco-German tank maker KNDS has postponed its blockbuster flotation until markets return to “more favourable” conditions, after investors balked at the target valuation of more than €12bn.
Investor sentiment towards the planned initial public offering by KNDS, which would have been one of the largest European market debuts in years, has soured in recent days.
The maker of the Leopard and Leclerc tanks had proposed a listing in Frankfurt and Paris later this month.
But the FT reported on Tuesday that KNDS was struggling to convince investors to back the IPO at a valuation of more than €12bn, raising the prospect of a delay.
KNDS’s German family shareholders, who own 50 per cent of the equity with the French government holding the rest, had made clear that they would not proceed with an IPO at a valuation below €12.5bn, the FT also reported. A valuation of between €18bn and €20bn had been discussed earlier this year.
On Wednesday evening KNDS, which is chaired by former Airbus chief executive Tom Enders, said that “in light of current market volatility for the European defence sector, KNDS . . . announces that its shareholders have informed the company of their intention to resume the initial public offering process upon the return of more favourable market conditions”.
The company added it had completed preparation phases for the IPO and that talks with investors had confirmed their belief in KNDS’s long-term strategy.
KNDS said the company and its shareholders stood “ready to resume the IPO process as soon as market conditions allow”.
A spokesperson for the German family shareholders declined to comment.
Investor euphoria around European defence stocks — fuelled by European governments re-arming in response to Russia’s full-scale invasion of Ukraine — has cooled amid concern about production bottlenecks and profit-taking.
The Stoxx Targeted Defence index, tracking Europe’s biggest listed defence groups, is slightly down so far this year.
Last month a decision by the German government to cancel a multibillion-euro warship project sent shares in defence champion Rheinmetall sharply lower.
The German defence company, which is seen by investors as the closest peer to KNDS, had been expected to take over the frigate project as lead contractor.
The cancellation of the project came on the same day that KNDS formally launched its plans for a listing — triggering exasperation among the company and its shareholders. People close to the IPO process complained of a lack of co-ordination with the German government.
One potential trigger for KNDS to revisit the listing could be finalisation of the German government’s planned big order for the Boxer, an armoured vehicle jointly built by the tank maker and Rheinmetall. It should be an important part of both companies’ order books.
