Defence is booming. But a favorable market alone does not make a compelling investment case. For Nordic defence and dual-use companies, the challenge is to show investors how exceptional market demand translates into sustainable competitive advantage, profitable growth and ultimately shareholder value.

European defence is undergoing a structural shift. Defence spending is increasing, procurement priorities are changing and capital is flowing into defence, security and dual-use technologies. At the Hague summit on 25 June 2025, NATO allies committed to "invest 5% of GDP annually on core defence requirements as well as defence-and security-related spending by 2035".

For Nordic companies, this creates significant opportunities which investors have noticed. But as more companies compete for capital and investor attention, exposure to an attractive market will not be enough.

A growing defence market is not an investment thesis. It is the starting point for one.

For management teams and boards, the more important question is: Why should our company be one of the winners – and how will that create value for shareholders?

From market opportunity to value creation

Companies naturally know their technologies, products and customers in great detail. They can explain why defence spending is increasing and why demand for their solutions is growing.

Investors look at the company through different lenses. They want to understand which part of the market the company can realistically address. Why it is positioned to win. Whether its competitive advantages can be sustained. How rapidly the business can scale. What capital will be required. And ultimately, how growth translates into margins, cash flow and returns on capital.

In other words, investors need to understand the company's value creation logic. This is where an investment narrative becomes important – not simply as a communications exercise, but as a strategic management tool.

What does an investor need to believe? 

Companies often approach investor communications by asking: What should we tell investors?

We believe management teams should start with a more demanding question:

What does an investor need to believe for our strategy to translate into an attractive investment case?

Five questions every management team should be able to answer

For defence and dual-use companies, five questions are particularly important.

1. Why this market – and which part of it?

“Defence” is not a market definition. Investors need to understand where the company's realistic addressable opportunity lies.

2. Why your company?

What gives your company the right to win? Technology, intellectual property, certifications, customer relationships, partnerships, installed base, speed or cost position? Genuine competitive advantages need to be distinguished from corporate claims.

3. Why now?

What has changed – in the market or within your company – that makes the opportunity actionable today?

4. How does growth become financial value?

Management needs to connect strategic ambition with revenue growth, margins, cash generation, investment requirements and capital allocation. Investors do not only want to know how large the company can become. They want to understand what kind of business it can become.

5. What should investors watch next?

What should happen over the next 12, 24 or 36 months if the strategy is working? A credible investment narrative gives investors tangible proof points against which execution can be assessed. Credibility is built when management gives the market a framework for measuring progress.

The difficult questions are often the most valuable

There is another reason to build the investment narrative carefully: the process exposes weaknesses. If management cannot explain why margins should improve as the business scales, the problem may not be the investor presentation.

If the addressable market is enormous but the company cannot define which part it can realistically capture, another market-growth slide will not solve the problem.

If investors struggle to understand the company's differentiation, management should ask whether the competitive advantage itself is sufficiently clear.

This is why investment narrative work belongs in discussions involving the CEO, CFO, management team and board. It sits at the intersection of strategy, capital markets and communication.

Done well, it does more than help a company explain its strategy. It tests the strategy through the eyes of the capital markets.

Ten minutes is a surprisingly good test

At the Listeds Investor Event · Defence, Nordic listed and pre-IPO defence and dual-use companies have around ten minutes each to present their businesses to investors and decision-makers.

Ten minutes is not much. That is precisely why it is useful. If the core investment case cannot be made understandable in ten minutes, another twenty slides rarely solve the problem.

The objective is not to simplify the business. It is to make its value creation logic clear.

The Nordic defence sector may be entering an exceptional period of growth. But as more companies compete for investor attention, the winners will not necessarily be those with the biggest market slides or the most ambitious growth targets.

They will be the companies that can credibly answer three questions:

Why us? Why now? And how does this create shareholder value?

That is the investment narrative.