Belgium is entering the European defense investment arena with two new public-private initiatives, one at the federal level and another from the Flemish government. Both aim to strengthen national resilience in the face of rising geopolitical tensions—while actively seeking participation from institutional investors including banks, insurers and pension funds.
On 4 April, the Flemish government gave the green light to a new regional defense fund, aiming to raise up to one billion euros. The Flemish investment vehicle will focus on high-tech companies with dual-use potential—that is, technologies applicable to both military and civilian contexts.
Flemish Finance Minister Matthias Diependaele confirmed that public and private capital will be pooled, with the region’s investment firm PMV spearheading the effort. Potential contributors mentioned include regional venture capital firm LRM, as well as banks, insurers and other institutional investors.
Federal fund seen at 2-2.5 billion euro
Meanwhile, at the federal level, the Belgian government has tasked SFPIM, its sovereign investment arm, with establishing a separate defense fund by 1 July. That fund is expected to target investments in defense, aerospace, cybersecurity and strategic infrastructure. The projected size: between two and 2.5 billion euros.
Defense Minister Theo Francken (N-VA) has floated the idea of converting the former Audi Brussels plant into a facility for defense-related manufacturing. Both funds are expected to steer clear of traditional arms production and instead focus on dual-use industrial and technological capacity.
Strategic alignment or competition?
Although the two funds will operate independently, Belgian officials have signalled a strong interest in collaboration to avoid overlap and maximise impact. Flemish authorities have highlighted the importance of synergies between the regional and federal levels, and are actively exploring cooperation with private partners and financial institutions.
Wallonia, Belgium’s French-speaking region, has not announced plans for a new fund, citing the longstanding defense and aerospace focus of Wallonie Entreprendre, the regional investment arm that holds stakes in firms like FN Herstal and Sonaca.
Financing under discussion
The exact financing structure of the federal fund remains under negotiation. One option under review is the use of dividends from state holdings in companies such as Proximus, Ethias, Belfius, Umicore and BNP Paribas. There is also talk of partial divestments, though recent market volatility complicates any near-term sales.
A proposed partial privatisation of NMBS, Belgium’s national railway operator, is also being debated in Parliament. However, Belgian Finance Minister Jan Jambon has warned against liquidating strategic shareholdings in firms like Euronext or Euroclear for short-term budgetary gain.
Institutional capital wanted
With geopolitical urgency increasing, policymakers are actively engaging with the financial sector to mobilise institutional capital. SFPIM’s chief investment officer Tom Feys confirmed that talks are underway with pension funds and insurers, noting that private co-investment is a core element of the fund’s mandate.
Michael Anseeuw, CEO of BNP Paribas Fortis and chair of banking federation Febelfin, said the financial sector stands ready to act as a “key enabler” in areas such as cybersecurity, robust infrastructure and defense innovation.
“Banks will decide individually where they engage—whether in sustainable finance, digital innovation or defense. These are not conflicting but complementary priorities,” Anseeuw said.
Reconciling defense with ESG
A significant debate is emerging around the compatibility of defense investments with ESG mandates. State-owned bank Belfius recently loosened its restrictions on defense-related investments. Insurer AG, while still excluding weapons investments, is now reviewing its position in light of the government’s call for broader engagement.
AG confirmed to Investment Officer that its revised approach will remain aligned with ESG criteria, with final decisions guided by evolving market and regulatory standards.
Asset manager Amundi argues that defense and sustainability are not mutually exclusive. The firm maintains that supporting national security through selected investments can be consistent with responsible investing.
Yet critics remain. Triodos Investment Management, a pioneer in sustainable investing, insists that defense is not an area for private capital. CEO Hadewych Kuiper warns of “perverse market incentives” if private investors chase returns from arms production, including longer conflicts and higher global insecurity.
This article originally was published on InvestmentOfficer.be.