TKMS, a shipbuilder, began trading on the stock market at 60 euros ($69.95), valuing it higher than expected, with a valuation of 3.8bn euros. This is due to a boom in global defence.

The listing is part of a strategy by German parent Thyssenkrupp, to streamline its structure and capitalize on the growing demand for defense assets around the world.

The shares of the company started trading at the Frankfurt Stock Exchange in a spinoff from Thyssenkrupp. Thyssenkrupp will retain a 51% share in TKMS and the remainder will be distributed to investors.

Atlas Electronics division of TKMS is the largest non-nuclear sub-marine, frigate and underwater technology builder in the world. This includes mine-sweeping systems.

Analysts expected that the spin-off would value the company between 2.3 and 2.7 billion euro.

Oliver Burkhard, CEO of TKMS, said before the shares started trading that "we need more flexibility... due to rising geopolitical conflicts."

Parent Thyssenkrupp spun-off TKMS to capitalize on the booming demand for defence gear after Russia's full scale invasion of Ukraine in 2020 and U.S. pressuring Europe to take matters into their own hands.

Thyssenkrupp shares fell more than 20% when TKMS began trading.

This coincides with the deliberations of the Franco-German defense supplier KNDS about an IPO in the next few months. It reflects the growing investor appetite for pure play in the defence industry.

TKMS employs over 9,100 people worldwide. Last month, the company held its first Capital Markets Day, releasing targets for margins that investors deemed not ambitious when compared to rivals such as Britain's BAE and Germany's NVL.

In the early 1800s the company began as a manufacturer of steam engines and rail cars. Later iterations produced Germany's very first submarine, known as the Brandtaucher. This was done to compete better with Denmark's Navy.

Commerzbank Citi and Deutsche Bank were the financial advisors for this listing.

(source: Reuters)