The Hungarian defence sector has reached a historic milestone, as 4iG and state-owned N7 Holding collaborate to create the country’s first defence industry holding company with mixed ownership. The company will be named N7 Defence Zrt. Under the agreement, 4iG will acquire a 75 per cent plus one vote majority stake, while the Hungarian state retains 25 per cent ownership.
The structure mirrors international models, combining state-owned defence capacities with the private sector’s resources and global networks. State ownership of the critical infrastructure ensures the security of supply for the Hungarian Defence Forces and preserves state influence in the defence industry. Meanwhile, innovation and market expertise from private partners support the holding’s international competitiveness, according to a press release by 4iG.
Additional benefits were also highlighted: the collaboration between public and private capital could strengthen the international presence of Hungarian defence products, expand export capacity, and launch new global development partnerships.
‘Our goal is to create an innovative and competitive defence industry group that can effectively serve the needs of both the Hungarian Defence Forces and international clients,’ said Gellért Jászai, Chairman of 4iG Group, at the transaction’s announcement.
Why Now?
In parallel with the military modernization programme launched in 2017, the Hungarian government set a clear goal to build a domestic defence industry, aiming to place Hungarian-made defence products on international markets. After nearly a decade of groundwork—and amid recent geopolitical developments—the sector has now reached a phase where export expansion is becoming a top priority.
‘Innovation and market expertise from private partners support the holding’s international competitiveness’
The ongoing wars in Ukraine and the Middle East have highlighted the critical need to strengthen defence capabilities. As a result, many European countries are now pursuing large-scale rearmament. However, due to limited local manufacturing capacities, many of these nations are forced to rely on external suppliers to fulfil their defence requirements. In response to the growing demand for military resources, initiatives such as ReArm Europe have emerged to expedite the fulfilment of these needs.
Potential Growth in Hungarian Arms Exports
This growing European demand signals a rapidly expanding market that is favourable for exporting Hungarian-made defence equipment. EU initiatives such as ‘Buy European’ could further strengthen Hungary’s position, prioritizing European-made products over non-EU suppliers.
If the upcoming NATO summit in The Hague approves a plan to increase defence spending to up to 5 per cent of GDP, it would give the defence sector another significant boost.
Sales can occur either directly to customers or through integration into the supply chains of larger defence companies. In the latter case, a smaller firm might act as a subcontractor, fulfilling orders or contributing to development projects—accessing markets it couldn’t reach independently. Given that Hungarian companies have extensive international networks, including partnerships with major players, like Rheinmetall, N7 Defence Zrt will likely be able to utilize both sales models.
A Common Model in Europe
This public-private partnership model is not unique. Many of the continent’s most prominent defence firms—such as Thales Group (France), Airbus SE (France–Germany–Spain), Kongsberg Gruppen (Norway), Leonardo S.p.A. (Italy), Hensoldt AG (Germany), Ogma (Portugal), and Indra (Spain)—operate under similar mixed-ownership structures, often with the state as a minority shareholder.
‘From a macroeconomic standpoint, the newly announced structure could prove highly beneficial for Hungary’
This model has spread across Europe because the skills required for effective sales, international networking, and market knowledge are often more concentrated in experienced private companies than government institutions.
The same is anticipated in Hungary. With this hybrid model, the state retains control over production and strategic infrastructure—critical for supply chain security—while private capital enhances the defence sector’s competitiveness. Improved competitiveness leads to better market positioning, more export opportunities, larger order volumes, higher revenue, and increased employment. Therefore, from a macroeconomic perspective, the newly announced model could be highly advantageous for Hungary.
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