Private equity firms are scouring for investment opportunities in European defense, chasing the once shunned sector in an effort to benefit from a historic switch to military expansion in the region.
Firms including Tikehau Capital and CVC Capital Partners have either been raising funds or putting together teams dedicated to investing in companies that help underpin national security. Others, Advent for instance, are preparing to shop defense assets to take advantage of the rising buyer demand.
The moves reflect what leading defense executives call a paradigm shift as Europe earmarks hundreds of billions of euros to rearm itself and reduce a dependence on the U.S. They also mark a change in attitude toward a sector that’s been unpopular with investors, owing to its capital-intensive and cyclical nature and the ethical risks associated with the business of war.
Private equity spending on defense has reached $1 billion in only five of the last 20 years, data compiled by Bloomberg show. In 2025, private investors have already forked out about $790 million in the industry, the data show, with the potential for big transactions to come. Bain Capital and KPS Capital are interested in Iveco Group NV’s defense unit, which could fetch as much as €1.5 billion ($1.7 billion), Bloomberg News reported last week.
“The defense sector looks like it will prove to be an exception to the broader downturn we are experiencing in dealmaking,” said Frank Bretag, head of industrials advisory at UniCredit. “They are reliant on European government spending, which is only likely to tick upwards.”
Among those looking for deals is Paris-based Tikehau, which is raising an €800 million aerospace and defense fund and has already collected more than half the target amount. Backers include the firm itself, as well as French aerospace giants Airbus, Safran and Thales.
“There’s a lot of investor demand for defense and aerospace exposure right now, given the massive industry backlog both in commercial aviation and defense industries,” Roberto Quagliuolo, Tikehau’s deputy head of private equity, said in an interview.
Tikehau isn’t alone. Weinberg Capital Partners, the French buyout firm with investors including BNP Paribas and Crédit Agricole, recently raised €215 million for its Eiréné fund dedicated to strategic security and defense. The company was founded by Serge Weinberg, the one-time chairman of French drugmaker Sanofi and hotel chain Accor.
“We think the barriers to investing in defense will progressively disappear,” said Lionel Mestre, a partner at Weinberg Capital. The fund closed above its target, Mestre said, adding that it had previously been harder to raise money for a sector that wasn’t considered compatible with environmental, social and governance policies.
Veritas Capital, which counts aerospace and defense and national security as one of its focus areas, is seeking to raise $13 billion for its latest flagship fund, according to data compiled by Bloomberg. KKR & Co., which has made European defense electronics and space acquisitions in recent years, is scouting for more opportunities.
Elsewhere, Klaus Hommels, the founder of European venture capital firm Lakestar, is chairing a €1 billion NATO Innovation Fund to invest in early stage startups working on dual-use technologies like artificial intelligence, quantum computing and propulsion. Like Mestre at Weinberg Capital, Hommels said European investors had been wary of defense assets before the geopolitical shift changed things.
“The perception of defense investments has shifted massively,” Hommels said. “High net worth individuals and the billionaires crowd in Europe are telling me it’s not just about returns, it’s for patriotic reasons too.”
