Abu Dhabi-based private equity firm BlueFive Capital is said to be preparing a fundraise of around $3bn aimed at investing in aerospace and defence companies, as investors position for an anticipated increase in military spending across the Middle East, according to a report by Bloomberg.
The report cites unnamed people familiar with the matter as highlighting that the vehicle is expected to target an initial close of roughly $1bn in the third quarter of 2026, although discussions remain private at this stage. The strategy will focus on companies developing technologies compatible with NATO standards, one of the sources noted.
Former UK Defence Secretary Michael Fallon, who serves as a senior adviser to BlueFive, has reportedly been engaging with prospective investors and portfolio companies as part of early fundraising efforts.
BlueFive reoptedly declined to comment, while Fallon did not respond to requests for comment.
The fundraising comes amid heightened global demand for air defence and missile systems, driven by escalating regional security tensions. The United States has recently accelerated approvals for multi-billion-dollar weapons sales to several Middle Eastern allies, including the UAE and Kuwait, as part of broader efforts to reinforce regional defence capabilities.
At the same time, ongoing conflict dynamics have strained global defence supply chains, with the US increasingly prioritising domestic inventory requirements while allied nations seek alternative procurement channels and partnerships. Ukraine has also expanded defence cooperation agreements with Gulf states, sharing expertise in counter-drone technologies developed during its conflict with Russia.
Founded in 2024 by former Investcorp executive Hazem Ben-Gacem, BlueFive has quickly expanded its footprint in the alternative investment space. The firm previously secured backing from Bahrain’s sovereign wealth fund and reported assets under management of approximately $4.4 billion as of late 2025.
The proposed fund would mark a significant expansion of its investment strategy into defence and dual-use technologies, aligning with broader regional and global shifts in security-related capital deployment.
