Creation of Hungary's First Public-Private Defense Industry Holding
A significant partnership aims to consolidate defense capabilities and attract expertise back to Hungary.
A groundbreaking agreement has been announced between the 4iG Group's subsidiary, 4iG Space and Defense Technologies Ltd. (4iG SDT), and N7 Holding National Defense Industry Innovation Ltd. (N7 Holding) to establish Hungary's first public-private defense industry holding company.
This initiative responds to the absence of a major private company in Hungary that could integrate defense industry capabilities, as outlined by 4iG Group President Gellért Jászai.
The transaction consists of two phases.
First, N7 Holding, a state-owned company under the Ministry of Economic Development, will create a new entity named N7 Defence Ltd. Subsequently, 4iG SDT plans to acquire a 75% stake plus one vote in N7 Defence, while N7 Holding will retain a 25% stake minus one vote.
The estimated value of the transaction ranges from 74.5 to 82.8 billion HUF (approximately 200 to 225 million EUR), excluding critical infrastructure assets such as properties and factories, which will remain state-owned.
Companies within the portfolio of N7 Defence will pay rent for the use of critical infrastructure.
Jászai emphasized that the state ownership of crucial infrastructure ensures the security of supply for the Hungarian Defense Forces and maintains state influence over the defense industry.
Additionally, the new holding will focus on expanding international relations, increasing export capacities, and selling industrial products, while supporting the return of Hungarian professionals working abroad.
As part of the agreement, the 4iG SDT already employs experts with international backgrounds, including Balázs Zábori from the European Space Agency and András Sík, who specializes in Earth observation data processing.
The company aims not only to serve the Hungarian military but also to penetrate international markets.
All collaborations will align with NATO regulations, with expectations for significant international achievements in the coming years, positioning the organization among the leading defense and aerospace companies in Central and Eastern Europe.
Notably, N7 Defence will encompass nine significant defense industry companies, including Airbus Helicopters Hungary and Rheinmetall Hungary, enabling a broad range of manufacturing capabilities from conventional military products to advanced technologies.
The government has expressed a commitment to retain critical infrastructure under state control to guarantee national security and supply resilience.
Financing for the transaction will be partly sourced from 4iG SDT’s own funds, with the remaining values covered by bank loans, reflecting a positive shift in financial institutions' willingness to invest in the defense sector due to recent global conflicts.
The projected employment levels for the new holding suggest it may provide jobs for approximately 2,500 to 3,000 people, including many Hungarian aerospace engineers and retired soldiers, which Jászai claims contributes positively to the domestic defense industry.
In discussions regarding external influences on their satellite initiatives, Jászai confirmed that recent disagreements between notable figures such as Elon Musk and Donald Trump would have no bearing on their plans.
They are in discussions for strategic collaborations not only with SpaceX but also with a range of other global partners, driven by business rationale.
The Ministry of Economic Development's officials highlighted that private sector involvement in the defense industry is not unprecedented in the EU and that the integration of strong market players is essential to enhancing Hungary's defense capabilities and industry.
The collaboration signifies a strategic investment in Hungary's defense infrastructure, aiming for the development of innovative capabilities and increased competitiveness in the global defense market.
The transaction is anticipated to conclude by the end of summer 2023, with assurances of creating new job opportunities and enhancing Hungary's technological output.
This initiative responds to the absence of a major private company in Hungary that could integrate defense industry capabilities, as outlined by 4iG Group President Gellért Jászai.
The transaction consists of two phases.
First, N7 Holding, a state-owned company under the Ministry of Economic Development, will create a new entity named N7 Defence Ltd. Subsequently, 4iG SDT plans to acquire a 75% stake plus one vote in N7 Defence, while N7 Holding will retain a 25% stake minus one vote.
The estimated value of the transaction ranges from 74.5 to 82.8 billion HUF (approximately 200 to 225 million EUR), excluding critical infrastructure assets such as properties and factories, which will remain state-owned.
Companies within the portfolio of N7 Defence will pay rent for the use of critical infrastructure.
Jászai emphasized that the state ownership of crucial infrastructure ensures the security of supply for the Hungarian Defense Forces and maintains state influence over the defense industry.
Additionally, the new holding will focus on expanding international relations, increasing export capacities, and selling industrial products, while supporting the return of Hungarian professionals working abroad.
As part of the agreement, the 4iG SDT already employs experts with international backgrounds, including Balázs Zábori from the European Space Agency and András Sík, who specializes in Earth observation data processing.
The company aims not only to serve the Hungarian military but also to penetrate international markets.
All collaborations will align with NATO regulations, with expectations for significant international achievements in the coming years, positioning the organization among the leading defense and aerospace companies in Central and Eastern Europe.
Notably, N7 Defence will encompass nine significant defense industry companies, including Airbus Helicopters Hungary and Rheinmetall Hungary, enabling a broad range of manufacturing capabilities from conventional military products to advanced technologies.
The government has expressed a commitment to retain critical infrastructure under state control to guarantee national security and supply resilience.
Financing for the transaction will be partly sourced from 4iG SDT’s own funds, with the remaining values covered by bank loans, reflecting a positive shift in financial institutions' willingness to invest in the defense sector due to recent global conflicts.
The projected employment levels for the new holding suggest it may provide jobs for approximately 2,500 to 3,000 people, including many Hungarian aerospace engineers and retired soldiers, which Jászai claims contributes positively to the domestic defense industry.
In discussions regarding external influences on their satellite initiatives, Jászai confirmed that recent disagreements between notable figures such as Elon Musk and Donald Trump would have no bearing on their plans.
They are in discussions for strategic collaborations not only with SpaceX but also with a range of other global partners, driven by business rationale.
The Ministry of Economic Development's officials highlighted that private sector involvement in the defense industry is not unprecedented in the EU and that the integration of strong market players is essential to enhancing Hungary's defense capabilities and industry.
The collaboration signifies a strategic investment in Hungary's defense infrastructure, aiming for the development of innovative capabilities and increased competitiveness in the global defense market.
The transaction is anticipated to conclude by the end of summer 2023, with assurances of creating new job opportunities and enhancing Hungary's technological output.
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