Tikehau Capital's Dual Play: Buybacks and Defense Investments Fueling European Growth

Tikehau Capital, a leading European alternative asset manager, has been making strategic moves to enhance shareholder value while positioning itself at the forefront of growth opportunities in the defense and security sectors. The firm's recent share buybacks and the launch of its defense-focused private equity fund, Tikehau Défense et Sécurité (TDS), underscore a dual strategy aimed at boosting returns and capitalizing on geopolitical and technological shifts. Let's unpack the implications for investors.

Share Buybacks: A Strategic Use of Capital

Tikehau's share buyback program, extended through July 2025, has been a consistent driver of shareholder value. As of April 2025, the firm had repurchased 6,102,390 shares, with an additional 8,925 shares bought in June 2025 at an average price of €18.75 per share. These repurchases, conducted under the EU's Market Abuse Regulation, reduce the number of shares outstanding, potentially boosting earnings per share (EPS) and improving return metrics.

The buybacks also reflect management's confidence in the firm's financial health. Tikehau's €500 million bond issuance in April 2025—oversubscribed 2.8 times—highlighted strong investor demand, enabling the firm to extend debt maturities and free up capital for strategic moves like buybacks. With a robust balance sheet and assets under management (AuM) growing 14% year-over-year to €50.6 billion, Tikehau is well-positioned to execute this capital return strategy.

The Defense & Security Fund: A Growth Catalyst

Meanwhile, Tikehau's TDS fund, launched in collaboration with Société Générale Assurances, CNP Assurances, and the CARAC Group, marks a bold entry into Europe's fast-growing defense and cybersecurity sectors. With an initial €150 million commitment from the three insurers, the fund targets aerospace, cybersecurity, and dual-use technologies—sectors critical to Europe's push for strategic autonomy.

The fund's structure is equally innovative. As a Specialized Professional Fund (SPF) under ELTIF 2.0 regulations, it operates on an evergreen model with a 99-year lifespan, offering quarterly liquidity windows. This aligns with long-term infrastructure and defense investments, which typically require extended holding periods. Exclusivity for the founding partners until September 2026 ensures early access to deals, after which the fund will open to other insurers and institutional investors.

The TDS fund benefits from Tikehau's 30-person dedicated team and partnerships with industry giants like Airbus, Thales, and Safran. Its focus on net-zero technologies and digitalization within defense manufacturing positions it to capitalize on both geopolitical tensions and the EU's green transition. With the French government backing the initiative as a tool to engage individual savers in national priorities, the fund could become a template for retail-accessible, high-impact investments.

Why This Matters for Investors

The buybacks and TDS fund are not isolated moves—they form a cohesive strategy to maximize shareholder value while accessing high-growth sectors. Here's why investors should pay attention:

1. Enhanced Returns via Buybacks: Reducing share count improves EPS and valuation multiples. Tikehau's disciplined repurchases at prices below its net asset value (NAV) suggest management believes shares are undervalued.

2. Structural Growth in Defense: Europe's defense spending is projected to grow at ~3.5% annually through 2030, driven by geopolitical risks and the need for technological sovereignty. TDS positions Tikehau to capture this upside.

3. Diversification Benefits: The fund's evergreen structure and focus on private markets provide a hedge against public equity volatility. For Tikehau, it diversifies revenue streams beyond traditional asset management fees.

Risks and Considerations

• Geopolitical Uncertainty: Defense spending could fluctuate with global tensions, impacting fund performance.
• Regulatory Hurdles: The SPF structure, while innovative, requires compliance with evolving EU regulations.
• Liquidity Constraints: The TDS fund's 15-day redemption windows may limit quick exits, though its evergreen nature mitigates this over time.

Investment Takeaway

Tikehau Capital's dual focus on shareholder-friendly buybacks and strategic defense investments presents a compelling opportunity for long-term investors. The buybacks directly enhance equity efficiency, while the TDS fund taps into a sector primed for growth. With €1.5 billion in fundraising ambitions for similar initiatives, Tikehau is betting big on Europe's need for resilient, tech-driven defense infrastructure.

For investors seeking exposure to both capital returns and thematic growth, Tikehau's moves warrant serious consideration. However, a 5–7 year horizon is advisable to fully benefit from the buyback program's EPS impact and the TDS fund's long-term compounding potential.

In a world where strategic autonomy and private capital are increasingly intertwined, Tikehau is writing the playbook for European alternative asset managers. Stay tuned for how this plays out in 2025 and beyond.