European Defence Market Update April 2026 (Houlihan Lokey)

Summary

• The FTSE 350 Aerospace & Defense Index is up more than 60% from 2 January 2025 through 17 April 2026.p.4
• Venture funding for European defence and security startups hit an unprecedented €7.4 billion in 2025, a 55% year-on-year surge.p.4
• The January 2026 IPO of CSG was the largest defence listing ever recorded globally.p.4
• Houlihan Lokey ranks first in 2021-2025 global aerospace and defence sellside M&A with 59 deals, with 90+ transactions completed since 2020 in defense.p.3
• U.S. allies used 943 Patriot air defence missiles in the first 96 hours of the war.p.7
• Projectiles built with mass-produced commercial technologies can be produced at a low cost (less than $50,000).p.6

Key insights

1. The European defence sector has moved from speculative fervour in 2025 to a disciplined pursuit of value realisation.p.4
2. Investors are funding tangible outcomes and proven capabilities rather than promises.p.4
3. Low production rates of Western air defence solutions are creating opportunities for companies in munitions supply chains.p.6
4. Global militaries are increasingly looking for novel, cost-effective solutions to combat emerging threats.p.6
5. The report covers geopolitics, the IPO surge, M&A and equity raises, the bond market shift and policy-driven investment.p.4