The AIM-listed group's top brass have set up a separate defence tech fund – and persuaded their own company to become its cornerstone backer.
Defence Holdings (AIM: DHG) has agreed to commit £2m as the cornerstone investor in a newly launched UK defence technology fund that was founded by three of its own directors, in a move that raises fresh questions about how the company is deploying shareholder cash.
The commitment lands just weeks after Defence Holdings unveiled its first revenue-generating MOD contract, a roughly £226,000 three-month engagement to test and deploy an intelligence and decision-support platform, marking what the company had billed as its transition to a trading business.
Chief executive Andrew Roughan, finance director Brian Stockbridge and chief technology officer Andrew McCartney are three of the four 'Founding Principals' behind the new UK Defence Fund, alongside company vice-president Richard Bassett. The fund's investment adviser, First Sentinel Corporate Finance, is run by Stockbridge, who is also a substantial shareholder in that firm.
The vehicle will take minority stakes of between £250,000 and £1m in early-stage private defence companies working across artificial intelligence, autonomous systems and cyber resilience. Defence Holdings said it will not pay performance fees on its own participation, with charges restricted to reasonable, properly incurred third-party costs, and confirmed its independent directors had approved the deal as fair and reasonable to non-related shareholders.
For all the sign-off from independent directors, the arrangement leaves Defence Holdings funding minority positions in unlisted, early-stage companies that could take years to deliver any liquidity event, while the fee-generating fund management structure sits outside the listed company entirely, benefiting the founding directors' separate venture rather than Defence Holdings shareholders directly.
This report is based on Defence Holdings’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Karl Greif on Unsplash.
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