Tank maker KNDS’ delayed IPO has underscored growing unease over the defence industry’s ability to keep pace with Europe’s rapid rearmament drive – with key peers such as Rheinmetall and CSG seeing their shares slide this year even as governments accelerate military spending.
The Franco-German firm postponed its IPO plan this week, citing a volatile market hit by the Iran war. Rivals like Germany’s Rheinmetall and CSG, which went public earlier this year, are down over 30 per cent and 57pc this year respectively.
“From a market sentiment perspective, it is a terrible time to IPO,” said Morningstar equity strategist Michael Field, noting weakened interest from investors linked to the Iran war.
The conflict and the ongoing war in Ukraine have highlighted the importance of cheap, mass-produced drones, curbing some enthusiasm for traditional equipment.
“It’s a logical decision,” he said, referring to the KNDS delay, while adding that geopolitical uncertainty and pressure from US President Donald Trump should see Nato countries increase their military spending targets.
KNDS had published its intention to float just a week earlier and was expected to go public on the Frankfurt and Paris stock exchanges in coming weeks. It will now restart the plan “upon the return of more favourable market conditions”.
Defence firms face concerns about their capacity to deliver after governments drastically increased their military budgets, taking the wind out of a stock rally since war began in Ukraine.
Rheinmetall suffered a particular setback with its shares falling by as much as 20pc last month after Germany abandoned the delayed F126 frigate programme, switching to the smaller TKMS Meko line.
German tank supplier Renk’s stock has fallen 14pc this year.
Industry analyst Sash Tusa of Agency Partners noted the “clear underperformance” this year of comparable shares in CSG and Rheinmetall, adding to concerns about the defence industry’s ability to keep up with Europe’s push for re-armament.
“Broader investment concerns have emerged about companies underperforming in execution terms, relative to their very strong order backlogs and market potential,” he said.
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