Fjord Defence Group: A Strategic Powerhouse in the Defense Supercycle

The global defense industry is entering a multi-decade supercycle, driven by geopolitical tensions, technological advancements, and a surge in defense budgets. In this environment, companies that combine capital efficiency, high-margin operations, and strategic consolidation are poised to outperform. Fjord Defence Group ASA (ticker: DFENS), formerly Aquila Holdings, has emerged as a compelling case study in this paradigm. Through its acquisition of Fjord Defence AS and rebranding as a defense compounder, the company is leveraging a “Buy and Build” strategy to capitalize on the sector's structural tailwinds.

Strategic Rebranding and Acquisition: A New Era for Aquila

In May 2025, Aquila Holdings ASA completed its acquisition of 99% of Fjord Defence AS, marking a pivotal shift from a diversified holding company to a focused defense compounder. The transaction, valued at NOK 178 million on a cash- and debt-free basis, was financed through a NOK 60 million private placement and a NOK 25 million term loan. This repositioning—culminating in the company's rebranding to Fjord Defence Group ASA—reflects a clear commitment to defense industry consolidation.

Fjord Defence AS, the acquired entity, has demonstrated exceptional growth since its founding in 2017. By 2024, it had achieved NOK 87 million in revenue and NOK 14.3 million in EBIT, with EBITDA margins consistently in the 15–20% range. Its order book of NOK 84 million as of January 1, 2025, signals robust near-term revenue visibility, with projections of exceeding NOK 100 million in 2025. The acquisition's strategic value lies in Fjord Defence's niche expertise in lightweight, modular equipment—such as tripods, weapon mounts, and recoil-damping systems—for ground and maritime applications. These products align with the modern military's demand for agility and precision.

US Market Expansion: A Catalyst for Long-Term Growth

Fjord Defence Group's US expansion is a critical component of its growth strategy. In June 2025, the company announced progress on a U.S. development contract for a lightweight tripod, with 50% of the options already ordered and scheduled for delivery by December 2025. This contract, while not disclosing exact figures, is expected to generate substantial revenue starting in 2027. The tripod's design—optimized for low disturbance and high durability—positions it as a competitive solution for U.S. military applications, where demand for modular, high-precision equipment is surging.

The company's recent NOK 8 million contract with a Northern European military vehicle producer further underscores its ability to secure repeat business. CEO Jon Asbjørn Bø, a seasoned defense industry leader, highlighted that the client is signaling increased demand for Fjord's products in 2026, reflecting growing trust in the company's capabilities. These developments, combined with the company's capital-light business model, create a scalable foundation for U.S. market penetration.

The “Buy and Build” Strategy: Compounding Value in a High-Margin Sector

Fjord Defence Group's long-term vision is to become a diversified defense group with NOK 2 billion in revenue within 3–4 years. This ambition is underpinned by a disciplined “Buy and Build” strategy, targeting small- to medium-sized defense companies with distinctive products and strong organic growth. The company's recent debt financing—comprising a NOK 30 million M&A loan and a NOK 30 million overdraft facility—provides the liquidity needed to execute acquisitions while maintaining a robust balance sheet.

The acquisition of Fjord Defence AS exemplifies this approach. By integrating a high-margin, fast-growing business into its portfolio, the company has created a platform for further consolidation. The transaction's structure—38% of the new entity's shares allocated to Fjord Defence's shareholders—aligns incentives and ensures continuity in management, with Bø and CFO Øyvind Mølmann steering operations. This leadership team's track record in scaling defense businesses adds credibility to the strategy.

Investment Thesis: Capital Efficiency and Structural Tailwinds

Fjord Defence Group's business model is uniquely positioned to thrive in the current defense supercycle. Its focus on niche, high-margin products (with EBITDA margins of 15–20%) and a capital-light approach minimizes exposure to cyclical downturns. The company's recent financial moves—such as the private placement and term loan—have strengthened its equity base, enabling it to pursue accretive acquisitions without overleveraging.

For investors, the key metrics to monitor include the company's ability to execute its U.S. contracts, the success of future acquisitions, and the efficiency of its capital structure. The stock's performance post-rebranding and the broader defense sector's momentum suggest a favorable risk-reward profile.

Conclusion: A Strategic Play on Defense Consolidation

Fjord Defence Group ASA represents a rare combination of strategic clarity, financial discipline, and operational expertise. By transforming from a holding company into a defense compounder, it has positioned itself to capitalize on the sector's long-term supercycle. The acquisition of Fjord Defence AS, coupled with its U.S. market expansion and “Buy and Build” strategy, creates a compelling case for investment. As defense budgets continue to rise globally, Fjord Defence Group is well-placed to deliver compounding value through disciplined growth and innovation.