The less exciting part is also the most important part for investors: capacity. Ammunition output cannot jump overnight. Air defence systems rely on electronics and specialist sensors. Naval programmes stretch across election cycles. In defence, “lead time” is a polite way to say “please bring patience”.
A useful mental model is simple: budgets create tenders, tenders create contracts, contracts create backlog, backlog becomes deliveries, and deliveries become cash. Markets often celebrate the first step and audit the last step later.
Not all defence is a tank: six “less obvious” doors
If you only look at the famous prime contractors, you miss the firms that keep systems working, ships afloat, and engines running. These are often less talked about, but they can be central to delivery.
Here are six examples that show the variety:
Kongsberg Gruppen
Kongsberg is a Nordic “systems house”. It builds and integrates high-end kit that sits on ships, in the air, and on the ground. Think missile systems, air defence components, naval combat systems, and software that helps forces detect, decide, and respond faster. It benefits when budgets move from big promises to practical upgrades in coastal defence and critical infrastructure.
Hensoldt
Hensoldt is a sensor specialist. It makes radar and electronic systems that help militaries see targets, track them, and protect assets from aircraft, drones, and missiles. It also works in electronic warfare, meaning tools that detect and disrupt signals. In modern defence, sensors often matter as much as the weapon, because you cannot hit what you cannot find.
Babcock International
Babcock is the “keep it running” business. It maintains and services complex defence assets, especially naval fleets, and it provides training and support services. Its work is less about building the next shiny platform and more about making sure today’s platforms are available, safe, and ready. When militaries expand fleets and run them harder, maintenance and training demand usually rises too.
Fincantieri
Fincantieri is a shipbuilder with a defence spine. It builds naval vessels and supports longer-life programmes where ships need upgrades, refits, and systems integration over decades. Defence shipbuilding is not a quick cycle. It is a long pipeline that rewards yards with capacity, skilled labour, and strong project management.
Dassault Aviation
Dassault builds military aircraft, most famously fighter jets, and it also has a civil aviation business. The defence appeal is straightforward: countries that care about strategic autonomy often prefer domestic control over key platforms, upgrades, and mission systems. Aircraft programmes also tend to be “ecosystems” with upgrades, support, and export potential.
Safran
Safran sits in propulsion and aerospace equipment. It makes engines and critical components used across aviation. In defence terms, it is a “readiness enabler”. Engines, parts, and maintenance cycles determine how much a fleet can actually fly. When governments order more aircraft, the parts and service chain becomes just as important as the airframe.
Notice the pattern. These businesses are tied to defence demand, but they are also industrial companies. They must manage input costs, hiring, quality, and production ramps. That is where both opportunity and disappointment usually live.
The IPO angle: new names, new expectations
CSG plans to list in Amsterdam as soon as 23 January 2026. The group says it aims to raise about EUR 750 million in new shares, with additional shares potentially sold by the main shareholder. Cornerstone interest totals about EUR 900 million, and the group has flagged a target dividend payout ratio of roughly 30% to 40% of net profit, with payouts expected to begin in 2027.
Why does this matter beyond the headlines?
First, it expands the investable map. Europe’s defence market is still dominated by a handful of large listed primes. New listings can give investors more ways to express a view, including in areas like ammunition and military vehicles where CSG is currently concentrated.
Second, it pressures the ecosystem to professionalise. Public markets demand reporting rhythm, governance clarity, and capital discipline. That can be good for long-term holders, even if it feels boring in the moment.
Third, it arrives as European policy tries to reduce friction for cross-border business. European Commission President Ursula von der Leyen has promoted the idea of an “EU Inc” style framework, sometimes described as a “28th regime”, to make it easier for companies to operate across the bloc. If Europe wants more scale in defence and tech, the legal plumbing matters too.
There is also talk of other potential listings in the defence orbit, including KNDS, the Franco-German tank maker created from KMW and Nexter. The common thread is straightforward: Europe wants more capacity, and capacity needs capital.
Risks: when momentum meets metal
Valuation risk is the obvious one. When shares price in years of smooth delivery, even a small delay can hurt. Industrial reality rarely moves in straight lines.
Political risk cuts both ways. Faster spending can boost demand, but shifting coalitions can also reorder priorities. A ceasefire headline can cool enthusiasm even if procurement plans take years to unwind.
Execution risk is the quiet killer. Bottlenecks in electronics, skilled labour, and testing capacity can squeeze margins. Watch for language about delivery timing, working capital, and cash conversion. If backlog rises but cash does not, the market’s patience usually shortens.
Investor playbook
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Track contract awards and delivery schedules, not only budget announcements. The calendar is often more useful than the speech.
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Look for evidence of capacity expansion: new lines, new shifts, supplier agreements, and hiring that sticks.
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Watch cash conversion over time. Backlog is promise, cash is proof.
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Treat IPOs as starting points for research: governance, customer concentration, and margin durability matter more than the debut pop.
Europe’s rearmament: the execution chapter
Europe’s defence push is no longer just a political storyline. It is becoming an industrial programme, and industrial programmes live or die by throughput, delivery, and cash. That is why the CSG IPO matters. It hints that the market is shifting from cheering budgets to funding capacity. It also explains why overlooked “enablers” can matter as much as the household names.
Sensors, maintenance, shipyards, and engines do not make front pages, but they make systems work. The opportunity is real, and so is the risk. When headlines quieten, reliability becomes the moat: on-time delivery, steady margins, and cash that actually arrives.
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