Pentagon Seeks Private Equity Partnerships for $150 Billion Military Modernization

Military Seeks Private Capital for Infrastructure Overhaul

The US Army has reportedly approached several major private equity groups to help fund what sources describe as a $150 billion infrastructure modernization program. According to reports, Army Secretary Daniel Driscoll and Treasury Secretary Scott Bessent met with approximately 15 Wall Street firms last week, including Apollo Global Management, Carlyle Group, KKR, and Cerberus Capital Management.

Military Seeks Private Capital for Infrastructure Overhaul
Creative Financing Models for Critical Assets
Data Centers and Rare Earth Facilities Among Priority Projects
Broader Administration Support for Private Capital
Strategic Minerals and Equity Investments
Industry Response and Future Outlook

The meeting, described by attendees as “serious and very wide ranging,” focused on developing innovative financing models for military projects. Analysts suggest this represents an unprecedented effort to directly involve private investors in national security infrastructure.

Creative Financing Models for Critical Assets

Sources indicate Secretary Driscoll presented the Army’s underutilized assets and requested “meaty” strategic projects from private equity groups. The Army’s top civilian official told the Financial Times he specifically asked for “clever financing models or unique financing models” to address the service’s infrastructure needs., according to technological advances

According to the report, Driscoll emphasized the Army’s budget constraints, noting he had only $15 billion allocated for infrastructure over the next decade despite needing $150 billion for necessary upgrades. “We are in a hole that we are not going to be able to dig out of without creative solutions coming in from outside parties,” he stated.

Data Centers and Rare Earth Facilities Among Priority Projects

The proposed partnerships could reportedly include data centers built on Army bases and rare earth processing facilities, with innovative payment structures such as swapping land for computing power or processed materials. Driscoll described the concept as “instead of paying us with cash for the land, you pay us in compute.”

One attendee said the discussions included lease agreements that would speed construction and lower capital costs for the military. The Army Transformation Initiative, as Driscoll calls it, aims to equip the service with new technology through partnerships with both Big Tech companies and defense startups.

Broader Administration Support for Private Capital

These talks follow President Donald Trump‘s August executive order opening US retirement plans to private assets, which analysts suggest signals continued administration support for the private capital industry. Cerberus, founded by Trump’s deputy secretary of defense Steve Feinberg, was among the participating firms, though Feinberg had vowed to divest his interests after his appointment.

According to sources familiar with the matter, other groups present included Advent International, BDT & MSD, and several large family offices. The report states that Cerberus has earmarked billions through a “strategic supply chain” fund for companies considered vital to US national interests, while Carlyle has extensive experience with defense contractors dating to the 1990s.

Strategic Minerals and Equity Investments

The Army is also reportedly considering direct equity investments in companies and developing stockpiles of critical minerals, partly motivated by China’s restrictions on rare earth exports. Driscoll questioned whether the Army should “hold them and then sell them to our suppliers to use and then sell back to us for the final product,” noting that “all of those options are on the table.”

This approach follows the Pentagon’s July announcement of a $400 million investment to become the largest shareholder in US rare earths producer MP Materials. The Army expects investment pitches in the coming weeks and plans to meet investors again in New York, with multiple deals potentially finalized by year-end.

Industry Response and Future Outlook

A person from one attending firm said “it was pretty clear Bessent and Driscoll are serious about working with private capital.” The discussion reportedly covered various financing tools for the Army’s supply chain and overall capital expenditures, including real estate refurbishment and financing against existing properties.

While Apollo, Advent, BDT & MSD, Carlyle and KKR declined to comment, sources suggest the US Army‘s outreach represents a significant shift in how military infrastructure projects might be funded in the future, blending national security needs with private sector financing expertise.