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FRANKFURT, July 28 (Reuters) - Buyout group KKR is preparing for a September stock market listing of Hensoldt in a deal potentially valuing the German defence supplier at 2.5-3 billion euros ($2.9-$3.5 bln), including debt, people close to the matter said.

KKR is planning for Hensoldt to send out an intention to float in late August or early September, with the Frankfurt listing taking place about four weeks later, after initially targeting an April initial public offering.

Market turbulence at the beginning of the COVID-19 pandemic led to the delay, but stock markets have recovered and Germany's blue-chip index is back at levels recorded in late 2019.

While no firm decisions on size or valuation have been made, KKR is expected to list 20%-30% of the company on the stock exchange, the people said, asking not to be named.

KKR declined to comment.

The investor bought Airbus's defence electronics business for 1.1 billion euros in 2016 and rebranded it Hensoldt, naming it after a 19th-century German maker of binoculars and telescopes.

Hensoldt makes military sensors, electronic warfare equipment, avionics and optronics. It employs 5,500 staff and last year posted 216 million euros in earnings before interest, tax, depreciation and amortisation (EBITDA) on sales of 1.14 billion euros.

It had 762 million euros in net debt as of end-2019.

This year, it is expected to post about 250 million euros in EBITDA, a person close to the matter has said.

Hensoldt has said it intends to double its revenues by 2022, benefiting from an expected European military spending spree.

Its high-tech cameras are used in products including Tornado fighter jets that fly surveillance missions over Syria and Iraq. It also supplies radar for Eurofighter jets and periscopes for submarines and Leopard and Puma tanks.

In addition, the company makes identification systems for combat jets, night vision devices, radar for civil air traffic control and systems for civil and military efforts to counter drones.

JP Morgan, Bank of America, Deutsche Bank and KKR Capital Markets are organising the flotation. ($1 = 0.8542 euros) (Reporting by Arno Schuetze, Hans Seidenstuecker and Alexander Huebner; additional reporting by Ludwig Burger and Abhinav Ramnayaran; editing by Thomas Seythal and Barbara Lewis)