 "US Army needs $150 bn for upgrades. It wants Wall Street to foot the bill")
The US Army is short by about $135 billion to overhaul ageing bases, depots, and logistics, a funding gap it cannot fill through Congress. Army Secretary Daniel Driscoll is now asking private equity giants such as Apollo, Carlyle, KKR, and Cerberus to help fund a $150 billion modernisation plan for the next decade, according to a report by the Financial Times.
The goal is to use under-utilised military land and assets to attract private investment into critical infrastructure and technology upgrades.
Driving the news: What Driscoll asked Wall Street to do
Last week, Driscoll and Treasury Secretary Scott Bessent co-hosted a closed-door forum with more than a dozen leading private capital firms. The aim was to get private finance to underwrite military modernisation.
Instead of seeking fresh Congressional appropriations, the Army pitched a framework that allows investors to use under-utilised military land and depots for projects that yield tangible infrastructure or services in return.
Driscoll described the opportunity as a “meaty” one, which meant large-scale, strategic, and capable of delivering results faster than the traditional procurement system, FT said.
Zoom in: What will the US army offer to private investors
The proposed partnerships go far beyond routine contracting.
- Data centres on army bases: Private investors could, for instance, build and operate data centres on Army property. In exchange, the Army would receive computing power and digital infrastructure rather than paying cash upfront.
- Rare-earth minerals processing: Another idea involves setting up rare-earth processing facilities on military land. These projects would help the Army secure critical mineral supplies while giving investors a long-term foothold in an increasingly strategic sector.
- Equity swap for national security: Other options on the table include leasing idle property, equity swaps, and co-investment in firms deemed vital for national security.
Cerberus Capital, a defence-focused private equity firm, was among those present. Its founder, Steve Feinberg, who now serves as deputy defence secretary, said he would divest relevant holdings to avoid conflicts of interest, FT reported.
The China factor
Behind the flurry of investor meetings lies a larger concern of the rising military and industrial dominance of China.
The Pentagon’s 2024 China Military Power Report warned that Beijing is rapidly modernising its maritime, aerospace, and missile systems. More worryingly, China controls much of the world’s rare-earth refining and magnet production, crucial for weapons, guidance systems, and electronics.
That dominance is viewed in Washington as a strategic vulnerability. The Army’s land-for-output model where private developers build domestic refining capacity is an attempt to build resilience in supply chains that have long depended on Chinese processing.
Between the lines: The policy context
The turn to private capital is not an isolated experiment. It fits neatly into Washington’s broader pro-market defence policy, which encourages private participation in strategic sectors.
The administration has already expanded rules to let retirement funds invest in private assets, and the Pentagon’s investment in MP Materials, a rare-earth magnet producer, reflects a similar logic of blending public priorities with private incentives.
For Driscoll, a former finance executive, the calculation is straightforward, bringing private-sector speed, capital, and innovation into the defence system may be the only way to close critical infrastructure gaps before rivals exploit them.
What’s next
Private equity firms have been asked to submit formal pitches in the coming weeks. The Army plans to conduct due diligence and reconvene with investors in New York soon after.
Driscoll hopes to finalise multiple deals by year-end, setting a new precedent for how the US military funds its backbone, not just through Congressional budgets, but through the combined muscle of public assets and private capital.