00:00You've already spent $15 billion in spending in defense in Advent since 2020, but this is specifically targeted towards next
00:08generation defensive tech.
00:10So why a billion dollars and why this push now?
00:13Well, the world has been changing, Danny.
00:16You see, for the last decade or so at Advent, we have been tracking technologies which state actors have been
00:23using to leapfrog each other.
00:25And that's created a little bit of a race to better technologies and created overmatches and gaps.
00:32And we have been trying to invest in these strategic areas in order to close these gaps as we go
00:40on.
00:40And I actually think there is a true role for private capital to play in closing these gaps as we
00:47go forward.
00:48So as you said, at Advent, we have since 2020 deployed over $15 billion into mature defense companies to help
00:57them innovate.
00:58And now the idea is to commit up to another billion dollars to help the innovators mature.
01:04That's what I wanted to ask specifically, because I think of Advent and I tend to think of larger cap
01:09deals.
01:10Chanel, are there larger cap deals to be done here?
01:12What are sort of the companies and the ticket sizes that you would be looking for?
01:16Or is this almost more, let's say, growth or VC-style investing?
01:20Well, it's both really at Advent.
01:22So historically, we, as you rightly point out, have been larger cap investors.
01:27So we have done take privates in the $5, $6, $7, $8 billion ranges.
01:32And we have aspirations to do even bigger things.
01:36And the idea there is to take these very mature businesses and see if we can instill a bit of
01:42innovation and bring them into the next generation.
01:44This specific area is actually to do something else, which is we've come across a host of these highly innovative
01:52next generation disruptive technologies as we've tried to partner with them strategically with our mature portfolio companies.
02:00And this is an opportunity for us to invest directly in some of these companies and help them into the
02:06next chapter of their growth.
02:09So it's already the world, Europe.
02:12We've been experiencing war, first with the war in Ukraine and now a new battlefront in Iran.
02:17You mentioned some of the gaps, Chanel.
02:18What are those gaps that you'd be looking to invest in?
02:22Well, the gaps are stemming from what I said earlier, which is this technological race for military superiority that is
02:30ensuing.
02:31So, so far at Advent, we have made an investment in Cobham, which has largely been around missile defense.
02:37We've done Ultra, which was, for the most part, submarine hunting.
02:42Maxar, which is now called Vantor, and that is around space-based intelligence gathering.
02:48And most recently, Atalon, which is a carve-out of the old coherent aerospace and defense business, which is, for
02:55the most part, going after anti-UAV laser weapons.
03:00And the underlying and cutting across area across all of these is to innovate them through autonomy and AI.
03:08There are also reports of you not just buying, but also exploring exits for some of your defense assets.
03:13It's an ultra-marine time, ultra-marine time business.
03:17Airbus also recently agreed to buy ultra-cyber from you.
03:20Along with the opportunity for buying, is now also a really ripe time to be exiting, again, given the geopolitical
03:26environment and concerns about war and where those gaps exist for different countries?
03:32Yes, absolutely.
03:33Look, we are, at the end of the day, investors.
03:35And as investors, we have a fiduciary duty to make sure that we are making good investments.
03:39So this is an opportunity where we find some of our companies that we have owned for three, four, five
03:46years already,
03:47and we have broken the back of what we wanted to do in terms of leapfrogging them into the next
03:52generation of technology,
03:54like ultra-maritime, where we've taken a legacy submarine-hunting business and deployed AI and autonomous solutions to it.
04:02It's a great moment to sell.
04:04Now, it is a precarious time, and so we're very conscious about who we sell to.
04:11On that as well, sort of along the similar lines, and only about 30 seconds here about Chanel, but how
04:18has it looked cooperating with governments in Europe, in the U.S.?
04:21Are they on board?
04:22Do you need to see more from them as you go along this venture of investing more in these companies?
04:28Yes.
04:29Look, governments and regulators have an enormous role to play here, right?
04:33Defense companies can innovate all they want.
04:35We can come up with very exciting new technologies, but these technologies, in the end, need to be procured and
04:41need to find their way into the hands of the warfighters, and that's where government and regulators play a role.
04:46The procurement engine in defense is notorious for being very slow, very clunky, taking an enormous amount of time, and
04:53I think we have the opportunity here to ask them to do it faster.
04:58And there is a very clear impetus from the top pushing for us to be more efficient, and we are
05:05excited to follow up on that.
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