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(Bloomberg) — Carlyle Group Inc. plans to launch a fund focused on the defense sector amid growing demand by governments to upgrade their military forces, according to people with knowledge of the matter.
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The Washington, DC-based firm has reached out to investors to discuss the fund, pitching it as a way to invest in so-called reindustrialization, the people said, who asked not to be identified discussing confidential information. This entails expanding the US’s industrial base and manufacturing.
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Carlyle hasn’t begun marketing the fund formally, nor has it communicated a target size, the people said. A representative for Carlyle declined to comment.
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Private capital has been flooding into the historically boom-and-bust defense sector as the US and European governments dedicate billions to modernize their armed forces. US President Donald Trump has prioritized weapons development, seeking a 50% boost in the annual defense budget next year to $1.5 trillion.
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Carlyle has its roots in the defense industry, having recruited former Defense Secretary Frank Carlucci in its early days. He brokered acquisitions of defense firms at low prices as the US Department of Defense cut spending in the 1990s, scoring big profits for the alternative asset manager.
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The firm named Ian Fujiyama head of aerospace, defense and government services in 2021.
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“Now as we’re pivoting from counterterrorism to great power competition, the need to do things better, cheaper and faster has never been more urgent,” Fujiyama said March 25 on Bloomberg TV.
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The US Army recently requested proposals for public-private partnerships across areas including energy, industrials, supply chains, manufacturing and critical minerals. Army Secretary Dan Driscoll has been meeting with private equity firms to fund a $150 billion infrastructure investment.
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Carlyle was granted exclusivity to negotiate with the US Army to construct a data center across 1,384 acres at Fort Bliss in El Paso, Texas. Carlyle invests in the data center ecosystem and has more than 20 gigawatts of data center capacity under development across the portfolio, including Copia Power.
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—With assistance from Erin Fuchs.
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English (US)