Hungarian defence industry undergoes privatisation
Hungary has announced a significant restructuring of the Hungarian defence industry, forming a new holding company in partnership with the private firm 4iG. The initiative shifts operational control to the private sector, while the state retains ownership of key infrastructure.
Hungarian defence industry goes under restructuring
According to Telex, Hungary is undertaking a significant overhaul of its defence industry by establishing a new holding company, N7 Defence Ltd., formed through a partnership between the government and the private 4iG Group. Under the agreement, 4iG will hold a controlling stake of 75% plus one share, while the state retains just under a quarter, 25% minus one share, falling short of what is normally considered a strategic minority.
Although operational control will shift to the private sector, the state will continue to own critical infrastructure, including factories, equipment, and real estate, which will be leased to the new company. A private sector player is best equipped to access European Union and member states’ defence industry development programmes, and able to ensure the necessary capital, without increasing state debt or adding to the fiscal burden, the ministry said.
The new holding company will bring together nine Hungarian defence firms, covering areas such as ammunition, small arms, and helicopter parts manufacturing. Among these are Aeroplex Ltd., Airbus Helicopters Hungary, and several Rheinmetall-affiliated businesses. However, not all companies under the previous N7 Holding umbrella are included; strategically important or less commercially viable units like HungaroControl remain entirely state-owned. This selective transfer, combined with the absence of an open tender and the timing before upcoming elections, has sparked debate. Officials maintain the move is a commercial decision aimed at fostering long-term growth within the Hungarian defence industry.
Mixed opinions
The Hungarian government argues the move allows for greater export potential and innovation, leveraging private sector agility while retaining public oversight through ownership of infrastructure and national defence laws. Critics, however, have voiced strong opposition. Péter Magyar described the privatisation as tantamount to treason, warning that it poses a serious national security risk, especially since 4iG counts foreign shareholders among its investors.
He demanded that the government halt the transaction immediately and threatened that a future administration would annul the contracts and hold those responsible to account. Magyar also pledged to sell nearly all his shares in 4iG in protest, retaining only one symbolically to advocate for the cancellation of the deal or the return of defence companies to state ownership without compensation.
Positive effects to come?
Financially, the transaction is valued between HUF 74.5 billion (EUR 186 million) and HUF 82.8 billion (EUR 207 million), with 4iG expected to finance the majority through a combination of equity and loans. The company aims to attract international investors and establish itself as a regional leader across five sectors: satellite systems, drone production, anti-drone technology, defence digitalisation, and geospatial services. Company leaders are hopeful, pointing to a “reverse brain drain” as skilled Hungarians return home, along with strong export prospects. Nonetheless, key details like partner approvals and financing arrangements are still pending, with the deal expected to conclude by autumn 2025. The company said:
“The partnership between the 4iG Group and the Hungarian State is expected to provide long-term benefits for the Hungarian defense industry and the national economy.”
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