VEEM’s Defence Growth Hinges on Order Flow After $14M Capital Raise

Capital Raise to Accelerate Defence Growth

VEEM Limited (ASX, VEE) has successfully raised $14 million through a placement of new shares to institutional and sophisticated investors, including a $1 million subscription from the founding Miocevich family and $2.7 million from major shareholder Perennial. The capital injection is earmarked to support VEEM’s expanding footprint in the defence sector, bolster working capital, and strengthen the company’s balance sheet as it pursues new contracts and scales operations.

The placement shares were issued at a 13.6% discount to the recent closing price, reflecting investor appetite for VEEM’s strategic pivot towards defence manufacturing. The company’s leadership emphasized that this funding will enable VEEM to capitalise on growing government defence expenditure, particularly in naval shipbuilding and submarine programs.

Strategic US Defence Partnerships

Central to VEEM’s growth story is the signing of a 9-year Manufacturing Licence Agreement (MLA) with Northrop Grumman, a leading US aerospace and defence technology company. The MLA, initially valued at US$33 million but with potential for expansion, grants VEEM the ability to compete for supply contracts related to the Virginia Class submarine program, one of the US Navy’s most critical undersea capabilities.

This agreement marks VEEM’s formal entry into the US defence supply chain alongside Huntington Ingalls Incorporated Newsport News Shipbuilding (HII-NNS), with whom VEEM recently achieved Level 1 accreditation. This top-tier supplier status underscores VEEM’s compliance with stringent quality and traceability standards, enabling it to manufacture certified components for major US naval programs.

VEEM has already received its first request for quote (RFQ) under these new agreements, with purchase orders anticipated in the first half of fiscal 2026. The company’s foundry capabilities, particularly in defence-grade castings, position it well to address capacity shortages in this niche but critical market segment.

Expanding Australian Defence Engagements

Beyond the US, VEEM continues to deepen its involvement in Australian defence projects. It recently secured a six-year, $65 million contract with ASC Pty Ltd, supporting submarine maintenance programs with revenue expected to ramp up in the second half of fiscal 2026. Additionally, VEEM is advancing demonstrator blade development for BAE Systems Australia’s Hunter Class Frigate Program, poised to become one of only two qualified global suppliers upon successful sign-off.

These contracts, alongside ongoing work on patrol boats and frigates, reflect VEEM’s broadening role in Australia’s naval defence manufacturing landscape, complementing its US expansion and reinforcing its position as a supplier of high-performance propulsion and casting systems.

Leadership and Outlook

VEEM has appointed David Singleton as a Non-Executive Director, bringing 25 years of defence industry experience, including leadership roles at Austal Limited and BAE Systems. His expertise is expected to guide VEEM through its accelerated growth phase and complex defence qualification processes.

While the company anticipates a slight dip in EBITDA in the first half of fiscal 2026 due to timing of orders, the outlook remains positive with expected revenue acceleration in the latter half of the year. The strengthened balance sheet and strategic contracts position VEEM to benefit from multi-decade defence programs in both the US and Australia.