VEEM, an Australian defence manufacturer specialising in advanced marine propulsion and gyro stabilisation systems, has announced the successful completion of a $14 million placement to accelerate its growth in the defence sector. The placement, finalised on September 30, 2025, garnered strong support from the Miocevich family, VEEM’s major shareholder Perennial Value Management, and other institutional investors.
The infusion of capital will be directed toward expanding VEEM’s capabilities in the defence sector, bolstering working capital, and strengthening the company’s balance sheet. This strategic move aligns with the rapidly growing global defence market, particularly in the western world, driven by substantial investments in shipbuilding and submarine programs.
VEEM Managing Director Mark Miocevich stated, “We have successfully re-positioned VEEM as a high-quality defence contractor, building on the world-leading position that we have in high-quality precision castings and propulsion systems. These recent signed agreements with HII-NNS and Northrup Grumman, together with our order pipeline for ASC and Austal, are a clear demonstration that we have now met the requirements of this huge market and are starting to reap the rewards.”
Key Highlights of the Placement:
- Successful Completion: $14 million raised through the placement of fully paid ordinary shares.
- Strategic Allocation: Proceeds to be invested in defence sector growth, working capital, and balance sheet strength.
- Strong Investor Support: Significant participation from major shareholders and institutional investors.
- Placement Details: Approximately 10.8 million new shares issued at $1.30 per share.
Northrop Grumman Partnership
A major milestone for VEEM is the recently signed nine-year Manufacturing Licence Agreement (MLA) with Northrop Grumman, a leading global aerospace and defence technology company. This agreement enables VEEM to supply equipment into the U.S. defence supply chain, with an initial value of up to US$33 million, potentially increasing through amendments.
Northrop Grumman Australia’s Country Executive, Rob Denney, commented, “We’re excited to take the next step in integrating VEEM into Northrop Grumman’s global supply chain. This MLA reflects our commitment to strengthening Australia’s defence submarine industrial base and supply chain resilience.”
Huntington Ingalls Industries Collaboration
VEEM’s progress extends to its collaboration with Huntington Ingalls Incorporated Newport News Shipbuilding (HII-NNS), a major player in the U.S. defence sector. VEEM has achieved Level 1 accreditation with HII-NNS, the highest tier of supplier qualification in the U.S. defence system. This accreditation allows VEEM to manufacture Level 1 certified components and positions the company to receive purchase orders in the first half of fiscal year 2026.
This partnership, coupled with the Northrop Grumman agreement, qualifies VEEM to provide manufacturing for two of the largest U.S. defence supply companies, enhancing its presence in the global defence market.
Broader Defence Opportunities
VEEM’s strategic focus on the defence sector is further evidenced by several other key developments:
- ASC Contract: A recently signed 6-year, $65 million contract with ASC, continuing a multi-decade relationship and demonstrating long-term potential for defence contracts.
- Hunter Class Frigate Program: Finalizing development of demonstrator blades for BAE Systems Australia’s Hunter Class Frigate Program, potentially leading to further Australian defence work and opportunities in other Type 26 frigate programs worldwide.
- Mogami Class Frigate: The Australian Department of Defence’s decision to purchase the Mogami Class Frigate presents opportunities for VEEM to supply high-performance propellers and castings.
- Other Defence Projects: Ongoing contracts for army vehicles and naval projects, including Austal’s Evolved Cape Class Patrol Boats and ANZAC frigates.
Corporate Governance and Leadership
VEEM has appointed David Singleton as an independent Non-Executive Director, effective September 30, 2025. Singleton brings 25 years of defence-related experience, including his previous role as Managing Director of Austal. His expertise in engineering, naval systems, and shipbuilding will be a valuable asset as VEEM expands its defence business.
Financial Outlook
The capital raising is expected to strengthen VEEM’s balance sheet, with a pro forma net debt position of approximately $0.6 million as of June 30, 2025. Additionally, the company anticipates receiving material up-front deposits for large defence orders, further solidifying its financial position.
While demand in propulsion and engineering remains solid, slower-than-anticipated conversion of gyro leads to orders and delayed ramp-up in ASC orders are expected to result in slightly lower 1HFY26 EBITDA compared to 1HFY25. However, revenue is projected to accelerate in 2HFY26, aligning with the cyclical nature of the submarine program, with potential upside from entry into the U.S. defence supply chain via HII-NNS and Northrop Grumman.
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