Defense and European sovereignty, savings issues according to Tikehau Capital
According to Henry Marcoux, deputy general manager of Tikehau Capital, defense and European sovereignty are emerging as top strategic issues for French savings. This comes with the opening of a new era of investment.
Europe is strengthening its armaments and redefining its industrial strategy. According to Henri Marcoux, deputy general manager of Tikehau Capital, this “paradigm shift” opens a new era of investment in defense and security. “A major transformation,” as highlighted in a statement, which the group has anticipated since 2018 and now comes with offers accessible to individual investors.
The environment has evolved. “We have moved away from a form of stability built around bilateralism, support from NATO and the United States,” notes Henri Marcoux. While the start of this rupture dates back to 2022 with the Russo-Ukrainian conflict, it would be simplistic to only focus on that. We are facing tensions with Russia, but also with the Middle East, China, and now the United States, following Donald Trump’s return to the presidency.”Marcoux emphasizes, “It is primarily a structural change.”
Structural Change
All this has brought to light a central question: Does Europe still have a true “real” deterrent capacity? While France established its own nuclear deterrence in 1964, today the issue goes far beyond the borders of France. It is, in fact, the collective sovereignty of the European Union that is in question. This realization has been amplified by the American attitude over the past 15 months. “It is primarily, insists the leader of Tikehau Capital, a structural change.”
Presented a year ago, the ReArm Europe Plan /Readiness 2030 emerges as the “most emblematic” spending program of the new Commission. “It plans, says Henri Marcoux, to unlock 800 billion in defense financing by 2029. This is in addition to national initiatives. For example, Germany announced in 2022 a plan to modernize the army and ease budget discipline rules. NATO countries have raised their defense spending ambitions. In 2018, they allocated 1.5% of their GDP to defense, amounting to 268 billion,” struggling to reach the organization’s 2% target. They now aim for 3% by 2030, amounting to 600 billion.
For an investor, the defense sector is “attractive”: it not only benefits from “massive” budgets but also offers great visibility. This is confirmed by the importance of order books. There is also an industrialization challenge on the Old Continent. Hence, new opportunities for investors. “Historically,” says the executive, “the sector depends on public budgets, which can be seen as a risk. However, a large part of the technologies, skills, and industrial chains serve both military and civilian markets. This duality secures the economic model and diversifies revenue sources.”
Three investment solutions
Tikehau Capital has assembled a thirty-person investment team specializing in aerospace and defense, and brought together about twenty “operating partners.” “We have formed strategic partnerships,” says Henri Marcoux, “with companies such as Airbus, Safran, Thales, and Dassault Aviation, and built an ecosystem with industry players like the Directorate General of Armament or the National Agency for the Security of Information Systems. We manage over 2.5 billion in defense-related strategies, financing about thirty companies employing 20,000 workers and generating over 3 billion in turnover.”
Initially, Tikehau Capital launched products for institutional clients. More recently, the offering has expanded to retail clients. Three initiatives have been launched: Tikehau Aero Partners II Feeder, FPS (Professional Specialized Fund) accessible directly via the Opale Capital platform dedicated to private asset distribution, Tikehau European Sovereignty Fund, eligible for a PEA, and Tikehau Defense & Security, a unit account accessible with a few thousand euros, with the threshold set by the insurer: Société Générale Assurances, CNP Assurances, or Carac. Tikehau Defense & Security invests in European companies specializing in aerospace, defense, and cybersecurity. The portfolio aims for an average annual net return of over 8% over at least five years with 70% in private equity, 20% in private debt, and 10% in liquidity.
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