By Christoph Steitz
FRANKFURT (Reuters) -Warship builder TKMS started trading at 60 euros ($69.95) a share on Monday, giving it a higher-than-expected valuation of 3.8 billion euros in its stock-market debut, as it rides a global defence boom.
The listing is the latest move by German parent Thyssenkrupp to simplify its structure and take advantage of growing global demand for defence assets.
Shares in the company began trading on Frankfurt’s stock exchange in a spin-off from Thyssenkrupp that will see the German conglomerate keep a 51% stake in TKMS, with the rest being distributed to its investors.
TKMS, which traces its roots back 187 years, is the world’s largest builder of non-nuclear submarines, frigates and underwater technology – including mine-sweeping systems – at its Atlas Electronics division.
Analysts had expected the spin-off could value the company at 2.3 billion euros to 2.7 billion euros.
“We need more flexibility … in light of rising geopolitical tensions,” TKMS CEO Oliver Burkhard said just before shares began trading.
Parent Thyssenkrupp spun off TKMS as it tries to cash in on soaring demand for defence equipment after Russia’s full-scale invasion of Ukraine in 2022 and U.S. pressure on Europe to take military matters into its own hands.
Thyssenkrupp’s shares were down more than 20% after TKMS shares began trading.
It also coincides with deliberations by Franco-German defence supplier KNDS over an initial public offering in the coming months, reflecting soaring investor appetite for pure plays in the defence sector.
TKMS, which employs more than 9,100 staff globally, last month held its first capital markets day, releasing margin targets that some investors said were not ambitious enough when compared with rivals like Britain’s BAE, Germany’s NVL and France’s Naval Group.
Initially starting out as a maker of steam engines and railroad cars in the early 1800s, later iterations of the company made Germany’s first submarine, the so-called Brandtaucher, as it sought to better compete with Denmark’s navy.
Commerzbank, Citi and Deutsche Bank acted as financial advisers on the listing.
(Reporting by Christoph Steitz and Paolo Laudani; Writing by Christoph Steitz and Matthias Williams; Editing by Emelia Sithole-Matarise and Thomas Derpinghaus.)
