Carlyle Group believes the addressable market for defense-focused investments is effectively limitless as public-sector military spending expands worldwide, Chief Executive Harvey Schwartz said on Wednesday.
Speaking at the Bernstein Strategic Decisions Conference in New York, Schwartz described a broad trend of rising defense allocations, saying the total addressable market for the firm’s new dedicated unit "is unlimited, because everywhere you go everybody’s increasing their defense budgets by 1%, 2%, 5%."
The freshly formed platform will invest across defense, aerospace and industrials, according to Carlyle's statement, giving the private equity firm a specific vehicle for opportunities tied to military spending and related industries.
Schwartz framed the move as an advantage rooted in Carlyle’s Washington, D.C., origins, positioning that background as beneficial compared with rivals based in New York as he led the firm through an internal dispute and an industry-wide slowdown. He said the firm is seeing so many prospective transactions in the sector that it has been forced to decline numerous smaller deals.
"There are so many potential deals to be done in the sector that 'we’re saying 'no' to a lot of transactions of the smaller ticket size,'" Schwartz said, and noted the new unit could enable Carlyle to complete transactions in the roughly $200 million to $300 million range.
Commenting on the macro backdrop for the opportunity, the article cited figures from the Stockholm International Peace Research Institute showing global military expenditure reached $2.89 trillion in 2025, with defense spending as a share of global gross domestic product at its highest level since 2009.
The new platform is intended to channel Carlyle’s activity into aerospace and industrial businesses in addition to defense assets, providing capacity to execute on mid-sized transactions the firm previously passed on due to structural limits in its deal approach.
Schwartz said the increase in government defense budgets is a global phenomenon, and that the firm’s heritage in Washington gives it a comparative advantage as it pursues deals in the space. The remarks underline a strategic push by Carlyle to capture deal flow tied to sustained public-sector defense investment.
Market implications
This initiative could expand private equity participation in defense, aerospace and related industrial sectors as Carlyle seeks to deploy capital into opportunities generated by rising public outlays.