Europe’s Defense IPOs Are Hot, Too. 5 to Watch.
European defense start-ups and established firms are increasingly pursuing IPOs and raising equity capital amid a rearmament surge.
EU states’ military spending increased 11% last year and nearly two-thirds since 2020, driven by geopolitical shifts.
Despite recent market dips, analysts view European defense as a long industrial cycle with strong order books and cheap valuations.
U.S. artificial-intelligence giants aren’t the only initial public offerings worth watching these days. European defense start-ups are also rushing to market.
Just in the past week, United Kingdom—based jet components maker Doncasters and Finnish communications specialist Savox announced IPO plans. They follow diversified armaments manufacturer Czechoslovak Group, or CSG, which in January raised 3.8 billion euros ($4.4 billion) for history’s biggest defense IPO anywhere. Coming attractions include German drone maker Helsing and Finnish satellite builder ICEYE.
Some established European defense mainstays are also raising equity capital. Leopard tank manufacturer KNDS Group, co-owned by the French and German governments, has penciled in a Frankfurt IPO this year. German conglomerate Thyssenkrupp spun off its naval division last October at a €5.2 billion valuation.
“Defense is no longer just a panic trade on scary news,” says Ruben Dalfovo, investment strategist at Saxo Bank in Denmark. “It is becoming a long industrial cycle.”
Europe’s defense offerings are dwarfed in scale by SpaceX, Anthropic, or OpenAI. They may prove no less important in fate-of-the-world terms, though.
The Old World is in the midst of a rearmament surge, catalyzed by the successive traumas of Russia invading Ukraine and the U.S. turning hostile under President Donald Trump. Military spending by European Union states jumped 11% last year, and by nearly two-thirds since 2020, the EU reports. U.S. expenditure fell in 2025, though this year should be different.
Eager to reduce dependence on Washington and less invested in expensive legacy systems, Continental defense ministries are more open to giving new tech a chance, argues Nicholas Nelson, general partner at London-based seed investor Archangel Ventures. “There’s a lot more money coming on-line that doesn’t have the baggage of an incumbent program,” he says.
The European arms establishment is also embracing the start-up sphere, not trying to freeze it out. Iconic German contractor Rheinmetall has one joint venture with ICEYE on space-based reconnaissance and another to build naval drones with U.K.-based Kraken Technology Group, one of Archangel’s companies.
“Rheinmetall is trying to build a whole network of tools linked by a single system,” says Michael Field, European equity strategist at Morningstar.
One more long-term advantage, Field adds, is Europe’s continued embrace of Ukraine while the U.S. all but abandons it. That gives Continental defense contractors a ringside seat to the astonishing innovation that has enabled Ukraine to survive. “We are able to share more about how they implement their systems and use it as a blueprint,” he says.
One thing not in new issues’ favor is current market sentiment around listed European defense stocks. After a blistering run last year, the Select Stoxx Europe Aerospace & Defense exchange-traded fund has counterintuitively fallen 15% since the Iran war started three months ago. CSG shares have lost half of their value since debuting four months ago.
Investors are taking a breather, not giving up on the sector, Field thinks. “It’s going to take Germany at least 10 years just to restock the weapons they have given to Ukraine,” he says. “Valuations are very cheap now relative to the order books and earnings growth.”
“Military spending is not just about one war,” Saxo’s Dalfovo echoes. “It is about Europe trying to rebuild strategic autonomy.”
Venture capitalist Nelson has his own take on the moment. “We’re in a hype cycle but not a bubble,” he says.
That’s about the best that investors in anything could hope for right now.