Something special: “The Silicon Valley approach is absolutely ideal for the US Army”

The US army has asked private equity groups including Apollo, Carlyle, KKR and Cerberus to pitch “meaty” strategic projects to help the service fund a $150bn infrastructure overhaul, ‘Financial Times’ reports.

US army secretary Daniel Driscoll and Treasury secretary Scott Bessent held a forum with about 15 of Wall Street’s best-known buyout firms to discuss deals.

Driscoll told the Financial Times he gathered the private investors to say, “‘Hey, here are all the assets we have in our arsenals and our depots that we are underutilising . . . What are those types of deals where we can work with you and invite you in?’”

The army secretary, the service’s top civilian official, said he asked the groups to draw up “clever financing models or unique financing models” to help meet the army’s infrastructure needs.

“We actually just want meaty projects,” he said.

The proposals mark the latest example of the Trump administration’s efforts to work with the $13tn private capital industry — and an unprecedented effort to enlist some of Wall Street’s biggest investors directly in US national security.

Driscoll added the projects could include data centres and rare earth processing facilities, and could involve the federal government swapping land for computer processing power or output from rare earth processing.

He described the proposal to the group as, “instead of paying us with cash for the land, you pay us in compute”.

Driscoll’s hunt for capital comes as he plots a revamp of ageing equipment. The secretary, who has a background in investment banking, told the FT he had a budget of just $15bn to spend on the army’s infrastructure over the next decade, but needed $150bn.

“We are in a hole that we are not going to be able to dig out of without creative solutions coming in from outside parties,” he said.

“The discussion ran the gamut, from finding financing to refurbish some real estate, or even raise financing against the real estate. There were also discussions on different financing tools for the army’s supply chain and overall capex.”

A person from another firm said, “it was pretty clear Bessent and Driscoll are serious about working with private capital”.

Driscoll is pursuing what he calls the Army Transformation Initiative to equip the service with new technology — and has welcomed partnership from Big Tech and defence start-ups.

“I can say unequivocally that the Silicon Valley approach is absolutely ideal for the army,” he said in a speech to the Association of the United States Army last week.

In July, the Pentagon’s announced it would spend $400mn to become the largest shareholder in US rare earths producer MP Materials.

The secretary told the FT the army could buy equity in companies in the same way. He also said it wanted to develop a stockpile of critical minerals — an effort partly motivated by China’s decision to restrict its rare earth exports.

Cerberus, which manages more than $65bn in assets, is among the PE industry’s largest investors in the defence sector and has earmarked billions of dollars through a “strategic supply chain” fund to companies it considers strategic to US national interests.

Carlyle, which manages $465bn in assets, is also a major investor in defence companies and made many of its early windfalls in the 1990s and early 2000s on Pentagon contractors.

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