![\"UK](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/07\/advisory.jpg\"\/)
<\/p>\n<\/p>\n
Interest in the UK defence sector is rising, and valuations are continuing to trend upwards with unmanned aerial vehicle (UAV) platforms receiving significant funding.\t \t \t <\/p>\n
\u201cThe upward trend of deals across the UK defence and national
\n UK defence M&A has kicked off strongly in 2026. There has
\n been\u00a0a record performance in the first half of of the year
\n with\u00a084 trade transactions and 33 financial transactions,
\n according to a new H1 2026 defence M&A report from Heligan Group<\/a>, an
\n investment and advisory business.
\n<\/p>\n
\n There have also been many new platform investments from private
\n equity, including Growth Capital Partners investing in Security
\n HQ, Evity Invest investing in Martin Precision and Sullivan
\n Street investing in Zenix Aerospace. The portfolio companies will
\n use M&A as a growth strategy, with some already completing
\n bolt-on acquisitions despite only recently finalising investment,
\n the firm said in a statement.<\/p>\n
\n security industry is expected to continue into the second half of
\n of 2026 and [into] 2027 as the market is repricing defence and
\n national security businesses,\u201d Matt Croker, corporate finance
\n parter at Heligan Group, said. \u201cThe dual-track processes between
\n private equity and trade buyers are now standard, and valuations
\n in contested processes are increasing as financial buyers are
\n willing to compete with acquirers.\u201d
\n<\/p>\n
\n “Private equity is now outbidding trade in many processes and
\n institutional capital in\u00a0defence\u00a0and national security
\n has never been greater,\u201d he added.
\n<\/p>\n
\n Prices\u00a0of some European defence-linked firms have\u00a0risen
\n in the past two\u00a0years, for example the case
\n of\u00a0Rheinmetal. Over the past five years
\n until\u00a0yesterday, around 13:00 UK time, shares in Rheinmetall
\n skyrocketed more than 1,960 per cent, although they have eased by
\n 35 per cent since the start of the year. This is perhaps
\n unsurprising after such a vertiginous ascent. Germany and the EU
\n have also recently agreed to hike defence spending. A number
\n of\u00a0investment
\n managers<\/a> \u2013 for example,\u00a0BNP Paribas Asset
\n Management\u00a0\u2013 have consequently been launching
\n defence-focused funds. WisdomTree has launched a new
\n exchange-traded fund:
\n The WisdomTree Europe Defence UCITS ETF (WDEF),<\/a> listed on
\n B\u00f6rse Xetra, Borsa Italiana and the London Stock Exchange.\u00a0
\n<\/p>\n
\n \u201cDefence and security are underrepresented in many portfolios and
\n have faced decades of underinvestment in Europe, resulting in a
\n significant capability gap. A structural shift is underway in
\n Europe as nations increase defence budgets to meet NATO targets
\n and respond to geopolitical challenges,\u201d Pierre Debru, head of
\n research, Europe at WisdomTree, said in a note.
\n<\/p>\n
\n The new UK Prime Minister Andy Burnham has appointed\u00a0John
\n Healey \u2013 who resigned as Secretary of State for Defence in June \u2013
\n as Chancellor of the Exchequer, aka finance minister. (Burnham
\n removed Rachel Reeves from the post.) Healey had argued about the
\n need for credible increases in defence spending as a reason for
\n standing down, so his
\n appointment<\/a>\u00a0to the Treasury will be seen as a sign that
\n the new administration will want to increase defence
\n spending.\u00a0
\n<\/p>\n
\n According to the Heligan Group report, acquirers are actively
\n seeking maritime electronic systems businesses but are finding
\n fewer than expected. Law enforcement technology is catching up,
\n and the businesses that have quietly built a position in this
\n market are going to find that the M&A interest arrives faster
\n than\u00a0anticipated.
\n<\/p>\n
\n Unmanned aerial vehicle (UAV) platforms have received the most
\n funding, the report states. Autonomous systems have accounted for
\n up to 80 per cent of battlefield losses in the Russia-Ukraine
\n war, and greater M&A activity in the sector is expected, with
\n companies that have received venture and growth capital funding
\n emerging as highly innovative, high-growth businesses.
\n<\/p>\n
\n \u201cIn H1 of 2026 we\u2019ve seen a significant shift in activity with
\n private debt funds now actively seeking to enter this market,”
\n added Croker. \u201cFor private equity overall, interest and deal
\n activity is increasing year-on-year.\u201d
\n<\/p>\n
\n “The defence and national security market is repricing with
\n valuations increasing, but this fundamental change is still early
\n in its cycle,\u201d he continued. \u201cCapital follows capital, and now
\n that the\u00a0Defence\u00a0Investment Plan (DIP) has finally been
\n released, a further step-up in M&A and investment activity is
\n a near certainty.\u201d
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