Abu Dhabi Firm Eyes Major Defence Fund
Abu Dhabi-based private equity firm BlueFive Capital is preparing a fundraise of around $3bn aimed at investing in aerospace and defence companies, as investors position for an anticipated increase in military spending across the Middle East, according to Private Equity Wire. The vehicle is expected to target an initial close of roughly $1bn in the third quarter of 2026, with the strategy focusing on companies developing technologies compatible with NATO standards.
Fundraising Efforts and Key Figures
Former UK Defence Secretary Michael Fallon, who serves as a senior adviser to BlueFive, has been engaging with prospective investors and portfolio companies as part of early fundraising efforts. The firm, founded in 2024 by former Investcorp executive Hazem Ben-Gacem, has secured backing from Bahrain’s sovereign wealth fund and reported assets under management of approximately $4.4 billion as of late 2025. This proposed fund would mark a significant expansion of BlueFive’s investment strategy into defence and dual-use technologies.
Market Drivers Behind the Fund
The fundraising occurs amid heightened global demand for air defence and missile systems, driven by escalating regional security tensions. The United States has accelerated approvals for multi-billion-dollar weapons sales to several Middle Eastern allies, including the UAE and Kuwait, as part of efforts to reinforce regional defence capabilities. Additionally, ongoing conflict dynamics have strained global defence supply chains, with the US prioritizing domestic inventory requirements and allied nations seeking alternative procurement channels and partnerships, as noted in Private Equity Wire.
Firm’s Growth and Regional Context
Ukraine has expanded defence cooperation agreements with Gulf states, sharing expertise in counter-drone technologies developed during its conflict with Russia. This aligns with broader regional and global shifts in security-related capital deployment, reflecting BlueFive’s quick expansion in the alternative investment space since its founding. According to Private Equity Wire, discussions about the fund remain private at this stage, and BlueFive declined to comment while Fallon did not respond to requests.
