Our chart of the week: Why defense is not just a trend, but a strategic capital shift.
Key PE events you shouldn't miss out on
Let’s dive in.
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Kasper,
CEO & Co-founder Balentic
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Blog: Target Locked: The Rising Case for Defense in Private Markets - Part 1
The landscape of defense investing has undergone a dramatic transformation, moving from the periphery of institutional portfolios to the heart of private market strategy.
Defense is increasingly recognized as a significant and expanding investment theme within private markets, encompassing private equity, venture capital, infrastructure, and private debt. This is the first installment of a three-part blog series that delves into defense investing within the private markets context.
“The supreme art of war is to subdue the enemy without fighting.”
Sun Tzu
Executive Summary
Defense investing has evolved from ESG exclusion lists to mainstream private market opportunities following geopolitical shifts and technological convergence
More than USD 4bn was deployed into defense-aligned private market deals in early 2025 alone, exceeding the entire 2023 total and almost as much as 2024
Both specialist and generalist general partners are carving distinct roles, bringing unique advantages from regulatory expertise to operational scale
ESG frameworks are evolving to incorporate national security considerations, with many institutional investors distinguishing between different types of defense exposure
Tracking the rise of defence investing? Listen in as Tikehau Capital walks us through their Aerospace & Defence strategy on Balentic Edge
Chart of the week
Why Defense is not just a trend, but a strategic capital shift
Source: S&P Global, March 2025
As public sector defense budgets surge in response to geopolitical uncertainty, private capital is following suit - deploying record levels of investment into defense and security technologies. This chart highlights a steep rise in government military expenditure, a backdrop driving an 18‑fold increase in VC/PE deal volume in "DefTech" since 2014 . With $4.27 billion already invested in aerospace & defense deals in early 2025 - nearly matching all of 2024 - this movement is clearly accelerating.
Top industry voices are now affirming the shift. Michael Sion and co-authors at Bain note that “private capital is poised to play a critical role in the modernization of the U.S. defense industry” by funding advanced dual-use technologies and affordable manufacturing.
Meanwhile, Heligan Group’s Matt Croker highlights private equity's expanding role: “Cybersecurity remains a standout sector… buy‑and‑build strategies are emerging but expected to grow quickly”. For LPs focused on resilience and alpha, the landscape is shifting from being a long-avoided sector to a strategically essential growth theme.
If defense is part of your thematic playbook, this is the moment to tune in. Find GPs leading the shift on Orca.
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Disclaimer: The information provided in this newsletter is for informational purposes only and should not be construed as financial or investment advice.
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