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Arlington closes $6B Fund VII to accelerate defense technology

Arlington Capital Partners closed ACP VII at $6bn; oversubscribed the fund will invest in defense, aerospace, government tech and healthcare.

AM
Alvaro de la Maza

Partner at Aninver

Key Takeaways

  • Sector: Aerospace & Defense.
  • Geography: United States.

Analysis

Arlington Capital Partners has completed a rapid, oversubscribed close of its seventh flagship vehicle, securing $6.0 billion of commitments to back companies in defence, aerospace and government-focused technology. The fund reached its hard cap in under five months, underscoring strong investor appetite for mission-critical industrial and software assets.

The raise marks a significant step up for the Washington, D.C.-based firm: ACP VII is roughly 57% larger than the group’s prior fund, closed in 2023, and more than 250% larger than Fund V from 2019. That expansion reflects both growing public budgets for national security and a renewed emphasis on onshoring manufacturing and critical supply chains.

Arlington’s leadership — Matt Altman, Michael Lustbader, Peter Manos and David Wodlinger — said investors are responding to long-term structural trends: rising defence spending, investment in government software and services, and demand for advanced medical and aviation technologies. They highlighted that re-up interest from existing limited partners for Fund VII exceeded 115% of prior allocations, a signal of concentrated LP conviction.

Since its 1999 founding, Arlington has built a specialised buyout franchise focused on regulated markets. The firm has executed roughly 200 investments across sectors including aerospace & defence, government services and healthcare, and says it has raised more than $14 billion in committed capital to date. In the first months of 2024 alone, Arlington deployed over $1 billion across 35 transactions.

ACP VII will direct capital toward a defined set of themes: manufacturing and supply-chain reshoring, mission-critical government software, next-generation defence technologies, cybersecurity, commercial aviation, advanced medical devices and healthcare IT. Arlington notes its portfolio companies operate about 10 million square feet of U.S. manufacturing capacity — a tangible footprint that aligns with policymakers’ industrial priorities.

The fundraise was supported by Evercore as exclusive global placement agent, with Simpson Thacher & Bartlett LLP serving as fund counsel. Arlington said the investor base for ACP VII comprises leading pensions, asset managers, insurers, endowments and foundations in the U.S. and allied countries — a concentrated group that the firm describes as focused on strategic, long-duration allocations.

Private capital targeting defence and government-adjacent tech has grown as fiscal pressures and geopolitical uncertainty push states to modernise capabilities. Analysts estimate global defence spending topped $2.3 trillion in recent years, lifting deal activity and valuations for specialised industrial suppliers and software vendors. For Arlington, the enlarged Fund VII provides both scale and optionality to pursue buy-and-build platforms in high-barrier sectors where recurring government demand supports defensible revenue streams.

Investors include: