European defense investment is experiencing a significant boom driven by conflicts in Ukraine and the Middle East, according to Houlihan Lokey. The investment bank reports record flows of private capital into the sector, with a strong upswing in defense-related IPOs, M&A deals, and start-ups.

David Kelnar of Houlihan Lokey's private capital team told PEI that investors are increasingly focusing on resilience themes. The geopolitical tensions from Russia and regional conflicts have created substantial opportunities for private market LPs and GPs looking to capitalize on the defense sector's growth trajectory.

This surge represents a major shift in European private equity allocation strategies, with defense investments becoming increasingly attractive to institutional investors. The trend suggests sustained capital deployment in defense technology and infrastructure across Europe.