Key facts
- Singaporean state investor Temasek is increasing its focus on defence investments.
- This strategic shift is driven by rising military spending in Europe following the war in Ukraine.
- Temasek plans to invest up to €17 billion in Europe, the Middle East, and Africa by 2029.
- The fund will primarily target dual-use technologies, serving both civilian and military customers.
- Investments will align with Temasek's environmental, social, and governance (ESG) guidelines.
Singaporean state investor Temasek is strategically increasing its investments in the defence sector, a move prompted by the ongoing war in Ukraine and subsequent boosts in military spending by European governments. Nagi Hamiyeh, Temasek's president of global investments and head of Europe, Middle East, and Africa (EMEA), stated that defence will be a key focus within the fund's broader expansion into the EMEA region, which currently represents only 12% of its S$518 billion ($401 billion) portfolio.
Temasek has already invested approximately €13 billion ($14.8 billion) in the EMEA region over the past two years and aims to invest up to about €17 billion by 2029. Hamiyeh indicated that while the fund has historically not focused on defence, citing its stake in Singapore's ST Engineering, it is now making an exception due to considerations of deterrence and sovereignty. The fund will primarily target dual-use technologies, which serve both civilian and military applications, rather than pure defence manufacturers. These investments will strictly adhere to Temasek's environmental, social, and governance (ESG) guidelines, explicitly excluding involvement in biological and chemical warfare.
Defence is positioned alongside sectors such as energy transition, infrastructure, luxury goods, industrial technology, and life sciences as areas where Europe holds a competitive advantage. Temasek is concentrating on larger European deals, with a minimum ticket size of €200 million and a preferred range of €500 million to €1 billion, to ensure its investment team of about 30 people can actively manage these stakes. Currently, 73% of Temasek's exposure lies outside Singapore, with 26% in the Americas and 17% in China. The fund has previously invested in European companies like Dutch payments firm Adyen and French AI startup Mistral AI.