An increasing number of banks and investment houses are pushing into the expanding defence sector in Europe, galvanised by the upending of geopolitics, relations with the US over NATO, and Russia's invasion of Ukraine more than three years ago.

Paris-headquartered Tikehau Capital has joined partners to create a private equity fund focused on defence, cybersecurity and European security more broadly.

The move comes as several European banks have announced plans to tap into the expected large rise in the continent’s defence spending amid heightened security fears stemming from Russia’s invasion of Ukraine in 2022, and US pressure for European NATO members to increase military spending.

Tikehau has teamed up with Société Générale Assurances, CNP Assurances and CARAC Group to create the fund. The fund will be available as unit-linked products in the life insurance and retirement savings policies of the three partners from September 2025, the organisations said in a statement yesterday. Initiated by Tikehau Capital, this Article 8 fund has an initial commitment of €150 million ($173,741), invested in equal parts by the three partner insurers.

The vehicle will be structured as a Specialized Professional Fund (SPF) in compliance with the new European ELTIF 2.0 (long-term investment fund) regulations, and will adopt an "evergreen" format, with a 99-year lifespan and subscription or redemption windows available every 15 days, it said.

In a separate move, also announced yesterday, Tikehau said its existing Tikehau’s Aerospace & Defense private equity fund has acquired ScioTeq, a Belgium-based provider of "rugged, high-performance display systems and mission-critical electronics that support situational awareness in the most demanding environments." This is the 15th portfolio investment since the underlying strategy was launched five years ago.

The new vehicle
“This capital contribution reflects their shared desire to support the strengthening of French and European industrial and technological capabilities, against a backdrop of growing challenges to strategic autonomy in defence and security. The aim is to support the emergence of future European leaders, while promoting job creation and economic dynamism in France and Europe,” the statement from the firms said.

“The strategic sectors of aeronautics and cybersecurity, which are essential to our defence, will receive particular attention because of the size and growth momentum of their markets. Many high-potential companies in these fields are also distinguished by the dual nature of their activities, both civilian and military – a factor that strengthens their resilience and encourages cross-fertilization between defence and civilian industries,” it said. 

In the first phase, the three partner insurers launching the fund will have exclusive rights for one year, until September 2026, to list and market the fund within their policies. At the end of this period, Tikehau Defense and Security may be offered to other insurers and will be accessible to any professional investor.

Since 2021, a team of 30 Tikehau Capital investment professionals has built up a diversified portfolio of more than 30 European companies operating in the defence, security and cybersecurity sectors. 

Tikehau said its work is being supported by the French defence ministry and French armament procurement agency.

"With four private asset unit-linked products launched in five years, Tikehau Capital has become a key player in the democratisation of non-listed investments via life insurance in France, with more than €1.5 billion raised to date,” Henri Marcoux, deputy CEO of Tikehau Capital, said. “Building on this experience, and against a rapidly-changing geopolitical backdrop, we are now looking to go one step further by offering a fund invested mainly in private equity. This will enable policyholders to participate in the national investment effort in strategic sectors.”

Tikehau Capital is a global alternative asset management group with €50.6 billion of assets under management (at 31 March 2025). 

Other players
ABN AMRO said it is committing €10 million to the Keen Venture Partners’ European Defence and Security Tech Fund. This is the first time the Dutch bank has invested into a dedicated European defence fund. Keen Venture Partners is a venture capital firm based in Amsterdam and London. The European Investment Bank is tripling the intermediated financing available to Europe’s defence-industry suppliers to €3 billion. The EIB is also triggering the new facility through an inaugural agreement with Deutsche Bank, providing long-term liquidity earmarked for security and defence investment projects. 

Earlier in June, BNP Paribas Asset Management (BNPP AM), the asset manager of BNP Paribas, said it had launched its BNP Paribas Europe Strategic Autonomy fund, a European thematic equity fund. At the smaller end of the scale, an investment firm operating in sectors including defence is Edinburgh-based Amati Global Investors.