- Capitol Meridian Partners has closed its second fund at $1.9 billion, exceeding its $1.2 billion target
- Private equity investment in U.S. aerospace and defense companies more than doubled in 2025
- The firm focuses on companies in national security, commercial aviation and government services
Capitol Meridian Partners, founded by former Carlyle Group investment professionals, has closed its second fund at $1.9 billion, exceeding its $1.2 billion target as private equity investment in the defense sector continues to grow.
How Was the Fund Raised?
The Washington, D.C.-based firm said Monday that Capitol Meridian Fund II closed at its $1.9 billion upper limit after more than 60 limited partners committed approximately $1.8 billion. Capitol Meridian and its affiliates contributed about $100 million.
Nearly 90 percent of Fund I investors also committed to the second fund, according to the firm. Capitol Meridian raised $900 million for its inaugural fund in 2024, exceeding its target and reaching its hard cap, with an additional $300 million committed for co-investments.
Why Is Defense Attracting Private Equity?
Private equity firms invested $10.2 billion in U.S. aerospace and defense companies in 2025, more than double the 2024 total, according to PitchBook.
Adam Palmer, founding partner at Capitol Meridian, attributed the fund’s roughly five-month raise to a surge of investor interest in the defense sector. He pointed to rising military spending tied to the conflicts in Ukraine and the Middle East, as well as the strategic rivalry between the U.S. and China, as key drivers behind the shift.
Co-founder Brooke Coburn said that the investor demand allowed the firm to defy a broader downturn in private-equity fundraising, with PitchBook data showing U.S. firms on pace for a third consecutive year of declining totals through midyear. Given the sensitive nature of its investments, Coburn added, Capitol Meridian must carefully vet its investor base to comply with national security restrictions on foreign ownership.
What Companies Does Capitol Meridian Target?
Since Capitol Meridian focuses on businesses involved in national security, commercial aviation and government services, the bulk of its limited partners are U.S.-based, with the remaining investors coming from Five Eyes countries. The firm typically invests between $50 million and $250 million in companies with $5 million to $75 million in EBITDA.
The firm has acquired nine portfolio companies and has a 10th under contract. Its investments include LMI, which provides management and logistics services to federal agencies, and Clarity Innovations, a provider of data and analytics software for the defense sector.
