Franco-German tank maker KNDS has shelved its planned initial public offering, originally slated for Frankfurt and Paris this month. The company cited unfavorable market conditions for the European defense sector, with investors reportedly balking at a valuation exceeding €12 billion. This decision marks a significant setback for what was anticipated to be one of Europe's largest market debuts in years.

KNDS's German family shareholders, who hold 50% of the company, had insisted on a valuation of at least €12.5 billion, a figure that earlier discussions had placed between €18 billion and €20 billion. The recent cooling of investor enthusiasm for European defense stocks, despite increased government re-armament, appears to have derailed the listing. The Stoxx Targeted Defence index has seen a slight decline this year.

The postponement comes after a turbulent period, including Germany's cancellation of a warship project that impacted shares of defense peer Rheinmetall. KNDS and its shareholders stated they are ready to resume the IPO process when market conditions improve, suggesting a potential future listing is still on the table. The company maintains investor confidence in its long-term strategy.