Thyssenkrupp warship spinoff TKMS taps into Europe’s defense boom with Frankfurt IPO

TKMS, the German warship manufacturer which has spun out from parent group Thyssenkrupp, plans to capitalize on the expected surge in Europe’s defense spend with “prudent, margin-oriented growth” after debuting on Frankfurt’s stock exchange Monday.  

The initial public offering saw TKMS launch at around 60 euros ($70) per share — giving it a market value of around 3.8 billion euros ($4.4 billion) — drawing strong demand from investors. Industrial engineering giant Thyssenkrupp will continue to hold a 51% stake in the company following the offering.

The company, also known as Thyssenkrupp Marine Services, builds both submarines and surface vessels, as well as electronics and software technology, which TKMS CEO Oliver Burkhard called the “jewel in the chest box” of the company.

This includes sonar equipment and certain autonomous devices, which are critical in the so-called ‘mighty domain’ operations “which is the next big thing in military warfare,” Burkhard told CNBC’s “Europe Early Edition” on Monday.

The IPO will enable the company to raise capital and expand capacity amid an anticipated ramp-up in demand for stronger defense capability, particularly in the naval sector, in Europe in the coming decades.

The U.S. has 71 submarines, while Russia has an estimated 64. Germany, by comparison, has just six, and has ordered six more.

Burkhard said TKMS has an order backlog of 18.6 billion euros, which will mean the company will likely remain at full capacity towards 2040, with one submarine typically taking between 5 and 15 years to build.