This article has been authored by Charlie Foster (Trainee Solicitor) in our Corporate M&A team.
This is the first article in a series examining the emerging opportunities at the intersection of defence, energy security and critical infrastructure resilience, and the resulting growth in areas such as venture investment, strategic partnerships and supply-chain acquisitions.
Critical National Infrastructure and the need for safeguarding
According to recent Reuters reporting, Western officials reveal Russia has been developing strategies to place disguised naval drones in key locations off the Norwegian coast. The alleged objective was to target military and civilian vessels and create disruption to critical national infrastructure, including the undersea cable serving Norway’s Svalbard archipelago. While Russia has denied such allegations, the reported activity has intensified concerns among NATO allies about the security and resilience of subsea infrastructure.
Although no thicker than a garden hose, these cables carry significant amounts of data downloaded at the SvalSat satellite ground station, lying as deep as 2,700 metres below the sea’s surface. Intelligence analysts have suggested that destroying deep-sea cables would be a core objective of any Russian effort to stress test NATO’s Article 5 mutual defence agreement.
The incident illustrates a challenge that has been building for years. Undersea telecommunications cables and energy pipelines are the backbone of the modern economy, carrying more than 95% of global internet traffic, recently described by Forbes as a “weak spot for national security”. Yet since the Cold War, safeguarding these assets has been awkwardly placed between the defence and energy sectors, owned fully by neither.
This is changing at pace, and the implications for corporate M&A are profound.
Atlantic Bastion: A £1.5 Billion Market Signal
The UK Government’s response to the subsurface threat has been Atlantic Bastion. This Royal Navy programme, launched in late 2025, is now backed by an additional £1.5 billion budget over a four-year period. Atlantic Bastion aims to track Russian submersibles and protect Critical National Infrastructure (CNI) across the North Atlantic — combining warships, patrol craft, autonomous surface and underwater vessels linked through digital networks.
UK intelligence sources suggest that Russia is adapting its fleet specifically to target critical undersea cables and pipelines. At the core of the Atlantic Bastion force are at least 13 Type 26 anti-submarine warfare frigates, supported by AI-enabled acoustic detection systems connected to Britain’s Digital Targeting Web as part of Project CABOT.
Most pertinently, the programme also includes a separate £330 million allocation over four years specifically for critical underwater infrastructure protection, with the Ministry of Defence actively exploring commercial partnerships to attract additional private funding.
Importantly, private investment has surpassed public spending at a 4:1 ratio. Atlantic Bastion is not simply a military programme; it marks the emergence of an expanding defence-industrial market, with dual-use applications across energy infrastructure monitoring, subsea CNI resilience and autonomous maritime operations.
The Spending Trajectory: 3.5% of GDP and the Surge of Defence Tech
Atlantic Bastion sits within a far broader economic shift in UK and European defence spending. This trend will create sustained, long-term demand for the technologies and companies that operate at the defence-energy intersection.
The UK Government has committed to increasing defence spending to 2.5% of GDP by 2027. At the 2025 NATO summit, member states agreed to raise spending on core defence to 3.5% of GDP, with a further 1.5% to be spent on “resilience and security” by 2035. That “resilience and security” category is where energy infrastructure protection, subsea monitoring and CNI defence sit, indicating that the demand shows no signs of slowing.
According to Dealroom, the UK led Europe’s defence tech boom in 2025 with $2.9 billion in VC funding. VC funding in the defence, security and resilience sector reached an all-time high of $5.2 billion in 2024 (up nearly 5x over six years), with this additional theatre only expected to reinforce the need for investment in the market.
This is not a temporary uptick. It is a rearmament. Driven by geopolitical friction and underpinned by government commitments, this is causing seismic shifts in market attitudes toward defence tech spending and demonstrating how wide the net can really be cast.
The Transatlantic Fracture: Why Sovereign UK Defence Matters More Than Ever
The investment case for UK-based defence technology companies has been further underpinned by ongoing tensions over the transatlantic relationship. European countries are under more pressure than ever to develop their own technologies and retain onshore control.
For British defence technology companies, this represents a historic opportunity. As European nations seek to build capability closer to home, in areas such as autonomous systems, AI-enabled ISR (Intelligence, Surveillance, Reconnaissance), and CNI safeguarding, UK firms are well positioned to capture a disproportionate share of the surging European defence market. Start-ups and scale-ups developing dual-use defence systems are particularly well-placed to take advantage of these new opportunities.
Early-stage investment in dual-use start-ups.
The companies developing autonomous UUVs (Unmanned Underwater Vehicles), AI-driven ISR and drone-enabled ISR assets will be central to building resilience in subsea communications.
Many of these companies are firmly early-stage, whether at seed, Series A or Series B and sit squarely at the defence-energy crossover – serving both government and commercial interests. The funding rounds they require represent corporate and venture capital advisory work that builds long-standing relationships as companies scale.
Energy providers, offshore wind developers and telecoms companies all have infrastructure that requires protection from emerging threats, and defence technology companies are beginning to offer the solution. The shaping of these relationships at early stages, whether as joint ventures or integrated service contracts, requires specialist corporate M&A advice.
As governments place greater emphasis on sovereign capability and infrastructure resilience, subsea security is likely to become an increasingly important area for investment, collaboration and consolidation. Businesses operating across defence, energy and telecommunications should therefore consider both the opportunities and the regulatory complexities arising from this developing market.