Temasek eyes European defence deals amid military spending surge

Singaporean state investor Temasek is looking to increase its investments in the defence sector as European governments ramp up military budgets in response to the war in Ukraine, a senior executive said on Thursday.

Defence will form part of Temasek's broader push to invest more across Europe, the Middle East and Africa, a region that currently accounts for just 12 per cent of its $518 billion portfolio, Reuters reported.money.usnews+1

Dual-Use Focus

"We have so far in the last two years invested something like €13 billion into EMEA," Nagi Hamiyeh, Temasek's president of global investments and head of Europe, Middle East and Africa, told Reuters. The fund said in 2024 it aimed to invest up to about €17 billion in the region by 2029.asiaone

Hamiyeh said Temasek would mainly target dual-use technologies — products serving both civilian and military customers — rather than pure defence manufacturers, while adhering to its environmental, social and governance guidelines.asiaone

"We have one company in Singapore, ST Engineering, which mainly serves the needs of the Singapore Armed Forces. But besides that, we never really looked at defence," Hamiyeh said. "But now when you look at deterrence, when you look at sovereignty, we're starting to make an exception."asiaone

A Changing European Landscape

Temasek's pivot comes amid a historic surge in European defence expenditure. EU member states spent €343 billion on defence in 2024 — a 19 per cent increase from 2023 — according to the European Defence Agency. That figure rose to an estimated €381 billion in 2025, exceeding NATO's 2 per cent of GDP benchmark for the first time in EDA records. The EU Council projects spending will reach 2.4 per cent of GDP and €454 billion by 2026.consilium.europa+4

The bloc has also opened new funding channels for the sector. In June, the European Innovation Council began for the first time offering direct equity investment in defence and dual-use startups, with grants of up to €2.5 million and equity stakes of up to €30 million available to qualifying companies.eic.europa

Bigger Ticket Sizes in Europe

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 allow its Europe investment team of about 30 people to play an active role after investing, Hamiyeh said. The fund lists defence alongside energy transition, infrastructure, luxury goods, industrial technology and life sciences as sectors where Europe has a "right to win."bloomberg+1