Private equity firm Warburg Pincus is teaming up with Munich Re's asset management arm to deploy billions into European defense companies. Warburg Pincus is currently raising capital for a dedicated fund platform, with Munich Re subsidiary MEAG joining as an anchor investor. According to a Bloomberg report, the defense fund is expected to reach a volume of up to 1.5 billion euros. Warburg Pincus declined to comment on the matter. The fund aims to acquire majority stakes in established mid-sized companies requiring fresh capital to expand their production capacities.

The industry is being forced to scale up significantly and rapidly in light of Europe's rearmament, said Tobias Weidner, who is responsible for industrial investments in Europe at Warburg Pincus. "We believe this represents a compelling long-term opportunity for us to support the growth of high-quality companies operating in strategically vital sectors." For years, fund managers and institutional investors had steered clear of the defense industry, as it was not considered compliant with ESG criteria. However, this sentiment has shifted. Munich Re's Chief Investment Officer, Nicholas Gartside, stated that defense and security are strategically important sectors as they strengthen Europe's resilience.

Warburg Pincus is building on its own experience in the aerospace and defense sectors in Europe and the U.S., according to the statement. Furthermore, the investor has bolstered its team with a group of high-ranking Bundeswehr and NATO generals, as well as defense executives. Former Renk CEO Susanne Wiegand and former TKMS head Rolf Wirtz are serving as advisors to Warburg Pincus.

(Reporting by Alexander Hübner, edited by Philipp Krach. For inquiries, please contact our editorial office at berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)