Plans for IPOs and spin-offs are turning defence divisions into standalone entities to unlock value and attract investment.
One high-profile case is Thyssenkrupp’s warship division (TKMS). Thyssenkrupp AG confirmed it is preparing a partial spin-off of TKMS, with a separate listing expected once conditions are favorable. This move comes after failed sale talks and is now supported by the German government, which may even take a direct stake to facilitate it. Euronext’s new pro-defence listing program has caught Thyssenkrupp’s attention – the company said it will “analyse” the potential impact of Euronext’s initiative on TKMS’s IPO prospects. The spin-off, dubbed Project “IPO-Ready”, is aimed at raising capital for TKMS to expand submarine production (amid a surge in demand from NATO navies) without draining Thyssenkrupp’s resources. Another example is KNDS, the Franco-German tank manufacturer (maker of Leopard and Leclerc tanks). Reuters reported that KNDS is considering an IPO as early as end-2025 or 2026, potentially in Frankfurt. Owned jointly by France’s state and Germany’s Wegmann family, KNDS sees booming valuations – Rheinmetall’s market cap soared to €39 billion – and political support as green lights for a public listing. The strategic logic for these moves is clear: by listing separately, defence units can obtain direct access to equity capital and be more agile in pursuing growth (e.g., hiring, R&D, acquisitions) to meet Europe’s defence needs. Investors, in turn, get pure-play exposure to defence upcycles. Of course, such transactions are “extraordinary” in that governments will closely oversee them; indeed, any KNDS IPO would require French-German agreement on governance, and the TKMS spin-off may involve golden shares or other controls. Nonetheless, the fact that these IPOs are on the table shows how capital markets are becoming part of Europe’s defence financing toolkit. In Germany, especially, it reflects a shift – historically, critical defence assets were kept either under conglomerate umbrellas or in state hands, but now the preference is to mobilize private capital (with appropriate safeguards) to strengthen those assets. If these IPOs proceed, 2025–26 could see Europe’s defence sector not only bulk up through budgets but also through fresh infusions of investor money, heralding a new era of public-private ownership mix in the industry.
Sources
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