Tankmaker KNDS is struggling to secure investor backing for its planned July IPO at a valuation exceeding €12bn, potentially delaying one of Europe's largest offerings. Preliminary investor talks suggest skepticism about achieving the target price, with some participants arguing the Franco-German group merits a lower valuation. The company's German family shareholders, owning 50% alongside the French government, have indicated they won't proceed below €12.5bn.

The IPO ambitions have significantly retreated from earlier discussions of €18bn-€20bn valuations. Market conditions have deteriorated as enthusiasm for European arms makers cools amid concerns about shifting warfare dynamics toward drones and production challenges. The Stoxx Targeted Defence index has stalled this year despite strong early performance.

Investor confidence was further shaken when Germany cancelled a multibillion-euro warship project, causing Rheinmetall shares to plunge nearly 20% and wiping out about 38% of the company's value this year. This cancellation coincided with KNDS's formal IPO launch, creating what insiders described as a 'perfect storm' of sector jitters.

KNDS maintains a record €33bn backlog for 2025, buoyed by increased European defence spending. However, uncertainty around Germany's future Boxer armoured vehicle orders clouds long-term prospects. The German family recently agreed to sell a 40% stake to Berlin, structuring the deal to ensure listing price premiums and potential performance-linked payments. A final IPO decision looms next week after additional investor meetings.