VEEM Secures US$33M Licence, Eyes Defence Revenue Surge in FY26

Strategic Capital Raise to Support Defence Growth

VEEM Ltd, a specialist in precision marine propulsion and defence engineering, has announced a $14 million capital raising via placement to institutional and sophisticated investors. This funding round is designed to underpin the company’s ambitious growth plans within the defence sector, particularly its expanding footprint in the United States submarine supply chain.

The placement, priced at $1.30 per share; a discount to recent trading prices; will bolster working capital and strengthen VEEM’s balance sheet ahead of anticipated new purchase orders from leading defence customers. Significant participation from cornerstone investors, including the Miocevich family and Perennial Value Management, underscores confidence in VEEM’s strategic direction.

Breaking into the US Defence Supply Chain

VEEM’s recent signing of a nine-year manufacturing licence agreement (MLA) valued at up to US$33 million with Northrop Grumman marks a pivotal milestone. This agreement qualifies VEEM to tender for the manufacture of specific parts for the Virginia Class nuclear-powered submarines, a program with production rates set to nearly double by 2028.

Complementing this, VEEM has achieved Level 1 supplier accreditation with Huntington Ingalls Industries Newport News Shipbuilding (HII-NNS), one of the highest tiers of qualification in the US defence system. This status expands VEEM’s scope to manufacture Level 1-certified components, with the first request for quotation (RFQ) already received and purchase orders targeted for the first half of FY26.

Robust Defence Pipeline and Operational Expansion

Beyond the US contracts, VEEM continues to secure significant defence work domestically, including a six-year $65 million contract with ASC and progress on the Hunter Class Frigate Program with BAE Systems Australia. The company is one of only two global suppliers capable of producing the required precision blades for this program, with Department of Defence sign-off expected in the first half of FY26.

VEEM is also expanding its manufacturing capacity with a factory extension scheduled for completion in the second half of FY26, positioning it to meet growing demand. The appointment of David Singleton, former Managing Director of shipbuilder Austal Limited, to the board adds seasoned defence and international business expertise to guide this growth phase.

Mixed Short-Term Outlook with Strong Medium-Term Potential

While the first half of FY26 is expected to see EBITDA slightly below the prior year due to slower conversion of gyro leads and delayed ramp-up in ASC orders, revenue acceleration is anticipated in the second half. This aligns with the cyclical nature of submarine programs and the momentum gained from entry into the US defence supply chain.

VEEM’s propulsion products maintain solid demand globally, with ongoing efforts to broaden the customer base and geographic reach. The company is also investing in product innovation, including the upcoming Mark III gyrostabiliser, to drive future sales growth.

Navigating Risks Amid Growth

VEEM acknowledges a range of risks that could impact its trajectory, including intellectual property challenges, reliance on key customers and personnel, supply chain vulnerabilities, and broader market and operational risks. The company’s diversified product portfolio and strategic partnerships aim to mitigate some of these concerns, but investors should remain attentive to execution risks and market dynamics.