Is investment in defence moving from a specialised area to mainstream opportunities in strategic security infrastructure? Recent developments suggest so.
We’ve reviewed the UK Government’s Defence Investment Plan (DIP), which outlines a planned £298bn investment in UK defence over the next four years. On the same day, UK Export Finance announced a new £50bn Defence Export Fund to support British defence businesses.
Here’s how we see opportunities emerging for our clients:
Attracting International Private Capital:
At the heart of the DIP is a focus on bringing private capital into defence. The Government is set to release a Defence Finance and Investment Strategy (DFIS), detailing how it will collaborate with investors to achieve its ambitions. The Defence Investors' Advisory Group (DIAG) has also been established bringing together key industry and professional expertise. While we await the DFIS and recommendations from DIAG, many of our clients are already seizing first mover advantage.
Export Credit Lending & Borrowing:
Banks and exporters will benefit from increased support and deal flow. Continued emphasis on SMEs means support for a diverse range of businesses and contract sizes. We have advised clients on a broad spectrum of export contracts and UKEF supported financings.
Space & Satellites:
£3.2bn has been allocated to this sector, with exciting opportunities across the space value chain and related infrastructure. It is vital for Europe to enhance its communications satellite fleet, given the growing number of U.S. satellites in low earth orbit. Travers Smith advised Eutelsat on its OneWeb constellation financing and we’re ready to help others navigate this evolving landscape.
Replenishing Munitions:
£11.1bn is earmarked for replenishing munitions, including plans for six new energetics factories by 2030. This creates opportunities for developers, as well as equity and debt investment. The first projects have commenced, with more in the pipeline for 2026 and beyond.
Innovation & AI; Cyber & Electromagnetic:
£1.6bn and £2.5bn have been set aside for innovation and cyber/electromagnetic sectors respectively. Businesses across these areas are poised for rapid growth, offering new investment and financing opportunities. A new Digital Targeting Web is being developed to combine and develop the digital services available to the Armed Forces on the battlefield.
Real Estate and Broader Infrastructure Investment:
Supporting all the above developments, there is a growing need – and significant opportunities – for investing in and financing defence related real estate. Increased defence spending will also drive demand for supporting infrastructure, including power and other essential services.