UAE weighs creation of new defense fund to invest in Ukrainian and Turkish drone makers

The United Arab Emirates is preparing to initiate investments in Ukrainian unmanned aerial vehicle (UAV) manufacturers, according to reports.

Abu Dhabi is currently discussing the establishment of a new investment fund specifically focused on the defense industry, Bloomberg reported, citing sources familiar with the matter. The primary objective of the proposed fund is to assist the UAE in bolstering its military capabilities in the face of threats originating from Iran.

According to the sources, the new entity will be granted the mandate to acquire equity stakes in defense companies across the globe.

These investments could encompass military producers in Europe and the United States, as well as drone manufacturers in Ukraine and Türkiye. Senior officials and Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan are reportedly participating in the high-level discussions regarding the project.

The discussions center on the creation of a new fund that would operate outside of Abu Dhabi’s three primary sovereign wealth funds and its existing defense enterprises, Bloomberg’s sources indicated.

The Emirate has previously established similar specialized platforms. These include MGX, which focuses on artificial intelligence investments, and Judan, a financial holding company with $237 billion in assets.

With total assets reaching $2 trillion, Abu Dhabi is positioned to become a significant buyer in a defense market that has surged due to a new global era of rearmament. This trend has been accelerated by Russia’s war against Ukraine and signals suggesting a potential decrease in US interest in NATO.

This shifting landscape is prompting private equity fund managers to establish dedicated teams and new vehicles specifically for investments in the national security sector.

The UAE is already a major purchaser of weaponry. According to data from the Stockholm International Peace Research Institute (SIPRI), the country accounted for 2.7% of global arms imports between 2021 and 2025.

During this timeframe, the Emirates assembled a military arsenal consisting of Patriot and THAAD air defense systems, F-16 fighter jets, and Black Hawk helicopters. Its primary suppliers include the US, France, and South Korea.

Following the onset of hostilities involving Iran, Washington carried out arms sales valued at approximately $16.5 billion to its Middle Eastern allies, including the UAE.

During the same period, Ukraine has utilized its experience in countering Russian drone strikes to sign defense agreements with several Gulf nations.