*

TKMS trades at 81 euros per share in Frankfurt debut

*

Valuation of 5 billion euros is double analysts'

expectations

*

Parent Thyssenkrupp seeking to cash in on defence asset

demand

(Updates with new stock price, adds details on the company and

interview with CEO of parent)

By Christoph Steitz

FRANKFURT, Oct 20 (Reuters) - Warship builder TKMS

rode a global defence boom to trade at 81 euros per

share in its blockbuster stock market debut on Monday, giving it

a valuation of more than 5 billion euros ($5.8 billion), around

double expectations.

The listing is the latest move by German parent conglomerate

Thyssenkrupp to simplify its structure and take

advantage of growing demand for defence assets.

Thyssenkrupp will keep a 51% stake in TKMS, as its shares

began trading on Frankfurt's stock exchange following the

spin-off, with the rest being distributed to its investors.

Shares in Thyssenkrupp were down 20.7% at 0928 GMT,

reflecting the transfer of the stake in the naval vessel

business. But they were up 10.2% when adjusting Friday's closing

price downwards to retroactively account for the transaction.

Headquartered in the northern German port city of Kiel on

the Baltic Sea, TKMS, which traces its roots back 187 years, is

the world's largest builder of non-nuclear submarines and

frigates. Its Atlas Electronics division also produces

underwater technology, including mine-sweeping systems.

Analysts had expected the spin-off could value the company

at 2.3 billion euros to 2.7 billion euros.

DEFENCE SPENDING BOUNCING BACK AFTER POST-COLD WAR LULL

Demand for defence equipment has soared in the wake of

Russia's full-scale invasion of Ukraine in 2022 and subsequent

U.S. pressure on Europe to bolster its military capacity.

TKMS's order book backlog has tripled in the past five

years, reaching 18.6 billion euros in June 2025, as defence

spending has surged back following a post-Cold War lull.

"We need more flexibility ... in light of rising

geopolitical tensions," TKMS CEO Oliver Burkhard said just

before shares began trading.

In a reflection of soaring investor appetite for pure plays

in the defence sector, the spin-off also coincides with

deliberations by Franco-German defence supplier KNDS over an

initial public offering in the coming months.

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.

The business that would later become TKMS began making steam

engines and railroad cars in the early 1800s. Later iterations

of the company made Germany's first submarine, the so-called

Brandtaucher, as the country sought to better compete with

Denmark's navy.

Commerzbank, Citi and Deutsche Bank acted as financial

advisers on Monday's listing.

Speaking at the debut in Frankfurt, Thyssenkrupp CEO Miguel

Lopez told Reuters the company was in intensive discussions with

India's Jindal Steel International over the sale of

Thyssenkrupp's steel division.

"We'll see what outcome we'll have over the next few

months," he said.

($1 = 0.8575 euros)