The US military has invited major private equity groups including Apollo, Carlyle, KKR and Cerberus to submit strategic projects to support a $150 billion overhaul of its infrastructure, according to the Financial Times.
US Army Secretary Daniel Driscoll and Treasury Secretary Scott Bessent convened a forum last Monday with about 15 top Wall Street buyout firms to discuss potential deals.
Driscoll told a British news channel, “Hey, here are all the assets that we have in our arsenals and warehouses that we’re underutilizing… What are the types of deals where we can work with you and invite you?”
He also urged investors to come up with “smart financing models or unique financing models” to help meet the military’s infrastructure requirements, stressing, “We really just want meaty projects.”
Potential projects
Driscoll suggested the projects could include data centers and rare earth processing facilities, potentially involving creative government-private arrangements, according to the news report. “Instead of paying us for the land in cash, you’re paying us in conversion,” he said, referring to the computer’s processing power.
One forum participant noted, the report said, ideas included building data centers on military bases and entering into leases with the government to speed up construction and reduce capital costs.
Conflict of interest and Cerberus
The meeting was attended by Cerberus, a company founded by Steve Feinberg – Trump’s deputy secretary of defense. Feinberg pledged to divest his interests in the firm after assuming his government role, the report said.
The Funding Gap and the Army Transformation Initiative
Driscoll, who has a background in investment banking, explained that the military faces a huge financial gap. “We’re in a hole that we’re not going to be able to dig ourselves out of without coming up with creative solutions from outside parties,” he told the news publication.
While the military’s budget for infrastructure over the next decade is $15 billion, Driscoll is seeking $150 billion to upgrade equipment and facilities.
While one participant described the forum as “serious and very broad, covering ways to find cost-effective capital for the Army’s supply chain.” Another reportedly noted, “It was pretty clear that Bessent and Driscoll were serious about working with private equity.”
The initiative, called the Army Transformation Initiative, seeks to integrate new technologies and supports partnerships with Big Tech and defense startups. “I can say unequivocally that the Silicon Valley approach is absolutely perfect for the military,” Driscoll said in a speech to the Association of the United States Army.
Equitable and critical minerals
The military is also exploring the possibility of taking ownership stakes in companies and creating stockpiles of critical minerals. Driscoll noted that such measures are partly motivated by China’s restrictions on rare earth exports. “Should we hold them and then sell them to our suppliers for use and then sell them back to us for the final product? All those options are on the table,” he said.
Driscoll said the Army expects to present potential investments and will conduct due diligence in the coming weeks and plans to finalize several deals by the end of the year.
Other forum participants included Advent International, BDT & MSD and several large family offices. Firms including Apollo, Advent, BDT & MSD, Carlyle, Cerberus and KKR declined to comment, the Financial Times reported.
Read also | Trump-Putin Budapest summit postponed, no meeting in ‘immediate future’
Key takeaways:
Military seeks private equity backing: The US military has invited Apollo, Carlyle, KKR, Cerberus and others to pitch projects for a $150 billion infrastructure overhaul.
Funding gap: current budget $15 billion; Army seeks $150 billion through creative financing and partnerships.
Potential projects: data centers, rare earth processing and other technology initiatives.
Creative financing: Proposals include government and private arrangements, such as paying with computing power instead of cash.
Army Transformation Initiative: Focus on Modernization, Major Technology and Defense Launch Partnerships.
Assets and critical minerals: The military is exploring stakes in companies and stockpiling rare earths amid China’s export restrictions.
Timeline: Posts are expected soon; several deals to be completed by the end of the year.
Conflict of interest: Cerberus founder Steve Feinberg pledged to divest after joining government.
Other participants: Advent International, BDT & MSD, large family offices; several companies declined to comment.
Read also | Trump-Putin Budapest summit postponed, no meeting in ‘immediate future’
