German drone maker Quantum Systems secures $1.2 billion funding

By Maria Rugamer and Hakan Ersen

July 2 (Reuters) - German defence technology company Quantum Systems said on Thursday it had raised $1.2 billion in fresh funding, valuing the drone maker at about $8 billion and marking one of the largest private investment rounds to date in a European defence technology company.

The valuation is roughly eight times higher than a year ago. The Munich-based company said the funding round was backed by international investors.

The financing reflects the rapid transformation of Europe's defence sector over the past two years, as investors increasingly back drone, software and autonomous systems companies, co-CEO Sven Kruck said.

The company said the fresh funding would support the expansion of production across allied markets and the development of interoperable autonomous systems linked through its Mosaic UXS software ecosystem.

Co-lead investor Airbus agreed to deepen its strategic partnership with Quantum Systems to develop next-generation capabilities.

"NEO PRIMES" EMERGE AS PRIMES UNDER PRESSURE

The rise of such companies has challenged an industry long dominated by established groups such as Rheinmetall, Thales and Leonardo.

Unlike established defence contractors focused on large, long-term programmes such as the Franco-German Future Combat Air System (FCAS) and Main Ground Combat System (MGCS), companies such as Quantum Systems have benefited from surging demand for quickly deployable drones and autonomous systems since Russia's invasion of Ukraine.

"We will continue to drive these investments in Europe forward," Kruck said.

Drone maker Stark raised 500 million euros last week. Rival Helsing, the EU's most valuable defence startup, is expected to complete a $1.2 billion funding round soon that could value the company at about $18 billion.

The investment surge follows a more challenging public market environment for parts of the listed defence sector.

Franco-German defence group KNDS this week postponed plans for an initial public offering, citing market conditions.

(Reporting by Maria Rugamer in Gdansk and Hakan Ersen in Berlin; Editing by Matt Scuffham)