Tensions between Moscow and Europe are rising. There are rumours of war. While Western nations seek to rearm and adopt the lessons learnt by Ukraine, a bubble has developed in Mil-Tec arounds autonomy and drones. Defence investment is not a speculative opportunity – but a key issue for the sustainability and longevity of nations. It’s a complex investment landscape that requires specialist expert knowledge.
Key Takeaways:
Defence investment is an economic necessity. It will not be buried by the developing Mil-Tec bubble.
Private capital firms rushing into the “Total Addressable Market” (TAM) rather than understanding the need is creating the frothy investment market.
The rules of defence investment are very different to Tech. Ultimately; there is one monopoly buyer of military kit – governments, but geopolitical shifts, changing alliances, and the reinvention and creation of new defence contractor “primes” underlies the re-growth of the sector.
The depth of US capital markets is funding the bubble – European investors have been slow to commit to Defence.
Understanding the evolution of the battlespace (which exists in multiple dimensions) is the key to due diligence of defence opportunities.
Military reality matters far more than financial hype. Investment needs to be considered but immediate.
As we wait to hear all about what Kevin Warsh says at Jackson Hole, I thought it might be interesting to write about my day job - financing the new Defence Investment Fund; Spitfire Strategic Capital.
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