In a recent online event hosted by Private Equity International – “Mobilising Private Capital for Europe’s Defence Renaissance” – UDSS Co-Chair Peter Hewitt set out a compelling case for why defence is no longer a niche concern for governments and generals, but a whole-of-society challenge that demands serious engagement from private capital.
Speaking alongside institutional investors and fund managers, Hewitt drew on his work with Universal Defence and Security Solutions (UDSS) and UDSS member roles in the UK Strategic Defence Review (SDR) to explain what the new security environment means for European investors – and where the real opportunities and responsibilities lie.
From distant wars to whole-of-society defence
Hewitt’s starting point was blunt: Europe no longer has the luxury of treating defence as something that happens “somewhere else”.
The UK Strategic Defence Review, he explained, is the first external review of its kind in 75 years, and arguably the most significant since the Cardwell Reforms of the 1870s. It contains 62 recommendations, but one idea runs through all of them:
Modern warfare is now a whole-of-society effort.
That means:
• Protecting critical national infrastructure – energy grids, ports, telecoms, transport, finance.
• Defending against cyber attacks on major companies – the kind of incidents we’ve seen against household-name UK brands.
• Accepting that attacks on commercial entities are often “probing missions”: tests of how far hostile actors can go in disrupting daily life.
For investors, the message is clear: if modern conflict touches whole economies and societies, capital markets are already part of the battlespace – whether they realise it or not.
The funding gap: public budgets can’t do this alone
Hewitt pointed out a stark mismatch between ambition and resources:
• The UK has committed to raise defence spending to 2.5% of GDP from around 2.3%,
• But there is effectively no “new money” for defence for the next two years.
At the same time, the SDR calls for faster re-armament, more resilient supply chains, and greater readiness for high-intensity conflict.
That leaves a simple question: where does the money come from?
Hewitt’s answer: private capital must become part of the solution – not by replacing government, but by complementing it through structured, predictable investment in:
• Critical infrastructure and logistics
• Defence-related industrial capacity
• Dual-use technologies (cyber, space, AI, autonomy, advanced manufacturing)
• Long-term platforms where service models and leasing structures make sense
He also highlighted a cultural challenge in financial regulation:
• In the UK, “we regulate for risk” – often slowing innovation.
• In the US, regulators more often “regulate for growth” – accepting measured risk to unlock capability and scale.
As public budgets tighten, Hewitt argued, defence is starting to look like “the new green energy” – a politically driven, long-horizon theme where policy, technology and capital flows are aligning. The difference is that in defence, the stakes are existential.
Defence is still “taboo” – but that’s changing
Despite the strategic need, Hewitt acknowledged that defence investment still carries a stigma for many institutions, particularly in Europe:
• ESG frameworks have often treated defence as morally equivalent to vice industries.
• Internal policies, rather than law, have excluded defence from portfolios.
• Many boards and investment committees lack the expertise to distinguish between responsible defence exposure and reputationally toxic positions.
However, he sees this changing quickly. As NATO states re-arm and Russia’s war in Ukraine drags on, more asset owners are “culturally moving towards acceptance” of defence as a legitimate – even necessary – area of investment.
The risk, he warned, is “tourist capital”:
• Funds piling into the “crest of the wave” – for example, one-way kinetic or attritable drone systems linked to the Ukraine conflict –
• Without the expertise to understand where sustainable demand will exist after a specific war ends.
Many managers “may not have the expertise to do so”, Hewitt suggested. The responsible path is for investors to recognise their own limits and bring in specialist advisers who understand both the military domain and the capital markets.
That, he stressed, is exactly where UDSS sits.
Bridging two worlds: government, military and financial markets
Hewitt described a deep “language and expectations gap” between governments and private finance:
• Accounting differences: public-sector accounting and concepts like sunk cost look very different to private-equity style financials.
• Language differences: military and civil-service communities often communicate in acronyms and assumptions that are opaque to investors – and vice versa.
• Expectation differences: governments sometimes use terms like “private equity” and “venture capital” as shorthand for “money that will arrive on government bond-like terms” – which is simply not how those asset classes operate.
At present, he noted, various forums exist – but they often bring together only one community at a time: officials with officials, investors with investors, military with military.
What’s missing are structured, repeated conversations that mix all three.
That is where UDSS’s network is uniquely valuable:
• Around 800 associates from across the Army, Navy, Air Force and wider defence community,
• Senior experience in capability development, procurement, strategy and operations,
• And growing engagement with financial institutions seeking to understand the new defence investment landscape.
UDSS, in Hewitt’s framing, acts as a translator and convener – helping government understand how capital really works, and helping investors understand what defence really needs.
Innovative models: what Voyager tells us about future defence finance
Hewitt highlighted existing examples where the UK has already used innovative financing to deliver core defence capability – particularly in the air domain.
He pointed to the A330 Voyager air-to-air refuelling fleet, acquired via a long-term private finance / leasing model:
• A 27-year contract starting in 2008
• Regulated, long-term income for the consortium providing the aircraft
• Guaranteed availability for the Armed Forces while avoiding a large upfront capital hit to the Treasury
By contrast, other airframes like the C-17 and A400M were bought more conventionally, with services contracted out but full capital cost borne by government from the outset.
For Hewitt, the Voyager example shows how the Ministry of Defence – which he described as “pretty much under-geared” – could explore more structured, asset-backed, long-term finance for appropriate capabilities.
This isn’t about financial engineering for its own sake. It’s about:
• Getting key capabilities into service faster
• Spreading cost over time in a way that fits fiscal constraints
• Creating predictable, investable cashflows that appeal to long-term capital (pension funds, infrastructure investors, specialist credit)
If done correctly, Hewitt suggested, this creates a win–win: greater resilience and readiness for governments, and high-quality, real-asset exposure for investors.
Beyond Western Europe: regulation, CEE and where capital is most needed
Responding to questions on Central and Eastern Europe (CEE), Hewitt noted that:
• France, Germany and the UK have been relatively innovative with PFI-type approaches in defence.
• Many CEE countries have not yet followed suit – even though, from a strategic perspective, investments there could be most impactful.
For private capital, CEE clearly offers opportunities. But Hewitt cautioned that regulatory regimes are critical:
• Investor-friendly financial regulation – the equivalent of the UK’s Financial Conduct Authority – is essential for structuring PFI/PPP-style defence deals.
• Where that framework is immature or restrictive, even strong strategic logic may be hard to convert into real projects.
His conclusion: conceptually, yes – CEE should be on investors’ radar for defence-related opportunities. But there is a lot of groundwork still to be done on regulation, governance and market structure.
Can Europe still rely on the US security umbrella?
The discussion inevitably turned to transatlantic burden sharing.
Hewitt’s view was measured but clear:
• Europe cannot simply rely on the US in the way it has for decades.
• Successive US administrations have signalled – in different ways – that Europe must “spend more on defending Europe” and take greater responsibility for its own security.
He argued that Europe needs:
• More honest debate about what self-reliance looks like,
• Deeper practical cooperation between the UK and EU states, regardless of Brexit,
• And a realistic appreciation that private capital will be essential if Europe is to bridge the gap between today’s force posture and the demands of a long war.
Where UDSS fits: helping investors engage with defence responsibly
Throughout the session, Hewitt returned to one consistent theme: expertise and translation.
Defence is complex. It involves:
• Highly technical capability programmes
• Sensitive data and operational realities
• Ethical and legal constraints that vary by country
• Long timelines, intricate supply chains, and geopolitical risk
Investors who want to contribute to Europe’s defence renaissance – and access the opportunity it represents – need trusted partners who:
• Understand defence from the inside,
• Speak the language of government, industry and capital, and
• Can help design investment approaches that are strategically useful, ethically robust and commercially sound.
That, in essence, is the role UDSS plays.
With a deep bench of former senior officers, officials and defence industry leaders, Universal Defence and Security Solutions is working with governments, primes and financial institutions to turn the ideas discussed in this webinar into practical pathways for investment and capability.
If you’re a financial institution, asset owner or fund manager looking to understand how your capital can support European and UK defence – responsibly and effectively – UDSS can help you navigate the policy, capability and risk landscape.
To discuss how we can work together on mobilising private capital for Europe’s defence renaissance, please email info@universal-defence.com