France's financial regulator has become the latest to facilitate increased defense spending by European countries, with the introduction of a fast-track approval process for certain strategies.
France’s financial regulator, the Autorite des Marches Financiers, said on March 21 it was introducing a fast-track approval procedure for asset managers launching certain defense investment funds.
The accelerated approval was introduced following the launch of France’s Defence Technological and Industrial Base funding by the government, the AMF said in a statement. The DTIB comprises a network of companies and organizations involved in equipping the country’s armed forces and defense efforts.
Asset managers launching new strategies that aim to make “significant investments in companies belonging to the (DTIB) will benefit from an accelerated processing of their approval applications, and enhanced support from the AMF teams,” the statement said. The AMF will also “actively pursue its contributions to European standard-setting work to ensure that sustainable finance regulations do not create undue obstacles to defense financing.”
The AMF is the latest regulator to reinforce the importance of protecting its country’s borders and that it does not conflict with other rules — particularly those related to environmental, social and governance concerns — amid continued geopolitical tensions. On March 11, the U.K.’s Financial Conduct Authority said there were no rules stopping investors with ESG mandates from investing in defense assets.
“The financial sector plays a vital role in supporting all sectors, including defense. There is nothing in our rules, including those related to sustainability, that prevents investment of finance for defense companies,” the FCA said.
Investors across the globe seem to be heeding the information — data from provider EPFR for the week ended March 14 showed that aerospace and defense funds hit record-setting weekly inflows at just under $1 billion. Over the 10 weeks to that date, the sector garnered more than $3.4 billion in total inflows.
Pensions & Investments has reported that investors have been grappling with adding, updating or increasing their defense stocks exposure for some time now. The situation has intensified with a European Union agreement on an €800 billion ($870 billion) “ReArm Europe” plan to boost defense spending, while Germany’s parliament approved a debt-financed defense and infrastructure spending package, which loosens borrowing limits on defense and security, while also enabling the creation of a €500 billion infrastructure fund.
