Investments in defense technology are increasing sharply as private equity firms turn to younger growth companies in the sector.
Growth investments from private equity firms amounted to 4 billion dollars during the first nine months of the year, compared with 500 million dollars for the full year 2024, according to Pitchbook. CNBC reports.
At the same time, concern about an investment bubble is growing.
Advent International’s Shonnel Malani warns that valuations are increasingly based on technological potential rather than revenues and profits. The company has declined several investments due to high valuations.
Pitchbook analyst Jim Corridore, on the other hand, believes that increased defense budgets and demand for new military technology support the investments. One challenge is the ability to sell the holdings.
Since 2021, 504 private equity deals have been completed in the defense sector, but only 101 exits have been recorded.
