Private equity giants Apollo (APO), Carlyle (CG), KKR (KKR) and Cerberus could be drafted in by President Trump to fund the U.S. Army’s creaking infrastructure to counter a more belligerent China.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Meaty Project
According to an article in the Financial Times, the U.S. Army is seeking around $150 billion to fund new infrastructure projects such as overhauling aging bases, depots and logistics over the next decade.
The need can’t be filled through the U.S. Congress, so Army Secretary Daniel Driscoll is now asking PE giants to come to the rescue. The goal is to use underutilized military land and assets to attract private investment into critical infrastructure and technology upgrades.
It is understood that last week, Driscoll and Treasury Secretary Scott Bessent co-hosted a closed-door forum with more than a dozen leading private capital firms.
Driscoll is said to have described the opportunity as a “meaty” one, which in soldier speak apparently means ”large-scale, strategic, and capable of delivering results faster than the traditional procurement system.”
Data Centers
The scope of the work won’t just mean putting new wallpaper up in the Officer’s Mess; it covers a range of modern military needs.
This includes building and operating data centers on army bases and even setting up rare-earth processing facilities on military land. These projects would help the Army secure critical mineral supplies while giving investors a long-term foothold in an increasingly strategic sector.
Other options on the table include leasing idle property, equity swaps, and co-investment in firms deemed vital for national security.
It is the threat of China, as well as military challenges in an increasingly complex world, which is at the heart of the move.
China is rapidly modernizing its naval, air and missile, systems and the threat of an invasion of Taiwan has U.S. military chiefs worried. China also controls the majority of mining and processing of rare earth materials and magnets needed for weapons, guidance systems and electronics.
The U.S. private equity groups have been asked to submit formal pitches in the coming weeks.
It would be a welcome boost to the fortunes of PE stocks, which have been hampered over recent months by economic concerns and high interest rates. They will hope to be back on the march soon.
Is APO a Good Stock to Buy Now?
On TipRanks, APO has a Moderate Buy consensus based on 8 Buy and 3 Hold ratings. Its highest price target is $173. APO stock’s consensus price target is $156.82, implying a 25.27% upside.
