Czech, Please: CSG's IPO Signals Defense Boom | Tema ETFs

Key Insights

• Defense spending is becoming structural. NATO’s latest commitments point to sustained, multi-year increases in defense and security spending, reshaping demand for ammunition and defense manufacturing capacity.
• Supply remains constrained. CSG (Czechoslovak Group) cites NATO ammunition stockpiles at roughly 10% of NATO-defined requirements, highlighting the scale of replenishment still ahead.¹
• Capital markets are reopening to defense. CSG’s IPO reflects renewed investor appetite and growing institutional support for publicly listed defense manufacturers in Europe.

A Bellwether Defense IPO

CSG’s recent IPO—which saw the stock surge 31% in its first day of trading on Jan 23²—marks an important moment for European capital markets and the defense sector, underscoring how geopolitics is reshaping investor priorities and public-market access for strategically critical industries.

The backdrop is a clear shift in defense policy. At the June 2025 Hague Summit, NATO members agreed to a framework targeting up to 5% of GDP in defense- and security-related spending, including at least 3.5% dedicated to core defense expenditure, with the remainder allocated to broader security, resilience, and industrial-base investments.³ While implementation will vary by country, the policy direction is unmistakable: higher and more durable defense budgets.

CSG positions itself squarely within this trend. According to company disclosures, CSG believes ammunition stockpiles across NATO countries currently stand at roughly 10% of NATO-defined standards, underscoring the urgency of replenishment following years of underinvestment and the ongoing conflict in Ukraine.¹ The company describes itself as one of the world’s largest producers of small- and medium-caliber ammunition, based on its scale and production capacity, as outlined in its IPO materials.¹

Operationally, CSG maintains manufacturing facilities across the Czech Republic, Italy, Slovakia, Serbia, Spain, the UK, the US, and India, providing diversified production aligned with NATO and allied demand. Approximately 68% of sales are generated from NATO member states, based on pro forma figures disclosed in connection with the IPO.¹ Growth has been further supported by acquisitions, including the purchase of Kinetic in 2024, which expanded the company’s ammunition and defense manufacturing footprint.⁴

Beyond CSG, the IPO highlights a broader effort to deepen capital markets for defense issuers. Euronext initiatives such as IPOready Defence and the European Defence Bond Label are designed to lower barriers for defense-related companies seeking public capital, reflecting increasing institutional acceptance of the sector.⁵

Why This Matters for Investors

CSG’s IPO illustrates a broader shift underway in defense investing.  

What was once viewed as cyclical and politically constrained is increasingly supported by explicit policy commitments, long-duration demand, and renewed capital-market infrastructure. For investors, this points to a defense cycle that may prove more durable—and more investable—than prior iterations, particularly as Europe works to rebuild industrial capacity and strategic stockpiles. 

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