In the summer of 2025, the Hungarian government decided to sell «the largest pearls» from the state defense industry to a private company. Such a rather strange decision of official Budapest caused significant concern among political, business and military circles within the country. Thus, in June of this year, the state defense conglomerate, united under the auspices of N7 Holding Nemzeti Védelmi Ipari Innovációs Zrt. (N7 Holding), and the Budapest company 4iG Space and Defense Technologies Zrt. (4iG SDT) signed a general agreement on the creation of the first joint public-private defense company in Hungary.
For reference: 4iG SDT is a member of the 4iG Group. The company specializes in research and development, systems integration and international commercialization of defense and space technologies. Its mission is to support the development of NATO-compliant defense capabilities through innovation, and to serve as a bridge between Hungary’s technology sector and the global defense industry.4iG SDT is a key player in Hungary’s defense innovation system and is actively involved in the civilian application of dual-use technologies.
On October 6, 2025, N7 Holding and 4iG SDT announced the signing of three sales contracts. According to them, N7 Holding contributes its holdings in non-monetary assets to N7 Defense Zrt. in four key defense industry subsidiaries: 1) Aeroplex Kft. (air repair company); 2) Arzenál Fegyvergyár Zrt. (small arms manufacturer); 3) Colt CZ Hungary Zrt. (assault rifle manufacturer); 4) Rheinmetall Hungary Munitions Zrt. (produces a wide range of ammunition, in particular for infantry fighting vehicles, main battle tanks, artillery, as well as systems for creating obstacles – decoy systems). As part of a separate agreement, N7 Holding transfers 49% of the state’s shares to Rheinmetall Hungary Munitions Zrt. VAB Kft company. In this way, 4iG SDT receives 75% + 1 vote in both holding companies. In addition, 4iG SDT acquires 100% ownership of Hirtenberger Kft. – manufacturer of mortars and ammunition, together with its subsidiaries.
The sale value is estimated at HUF 72.1 billion (€184 million), which 4iG management says will be financed by international loans. Moreover, by «lucky coincidence», in August of this year 4iG received unexpected support in the amount of 50 billion forints from the Hungarian state investment fund VIMA. Of course, at the formal level, in order to complete the specified agreements, it is necessary to obtain the approval of the antimonopoly body. However, no one doubts that, within the authoritarian regime that Prime Minister Viktor Orbán has built, the antimonopoly body will give permission for agreements that are concluded at the initiative of the current government. As for the fate of three more companies, namely – Airbus Helicopters Hungary Kft., SATYPS PSP Hungary Zrt. and Dynamics Nobel Defense Zrt. –, they did not become part of the announced 06.10.2025 agreements. The parties did not rule out future cooperation in relation to these companies, however, due to regulatory conditions and business considerations, they postponed this potential cooperation for the future.
A number of Hungarian observers questioned the highly suspicious timing of the aforementioned sales agreements. The question arises, is it really a pure coincidence that the state transferred more than 75% of its shares in these defense companies to a structure such as 4iG, which is a former telecommunications and IT company, just a few weeks after the EU presented its programs ReArm Europe and SAFE?
Critics V. Orbán sees these deals as an attempt to transfer valuable assets to circles close to the government six months before the parliamentary elections, in which serious competition is expected between the pro-government party «Fides» and the main opposition political force – party «Tisa» led by Peter Magyar. Therefore, it is possible that, according to the plan of the closest circle of V. Orbán, the transfer of the most valuable enterprises of the Hungarian defense industry into the private hands of «the right people» should ensure that, even if «Fides» loses in the April 2026 elections, extremely valuable assets will remain with «of their people». As some Hungarian economists emphasize, the mentioned defense companies were created at one time with state funds, and the armed forces, which are their main client, are financed by taxpayers. There is, therefore, no point in suddenly involving a private intermediary in this active link.
Former commander of the Hungarian Defense Forces and ex-Chief of the General Staff Romulus Rusin-Sandy (who joined the team of P. Magyar) stated that he was deeply affected by the unfortunate fact that a large part of the state’s defense industry ended up in the hands of one private company. According to his assessment, this does not so much increase security as create vulnerability for the defense industry.
The leadership of the «Tisa» party promises that after the elections (and in case of victory in them) it will return the mentioned defense companies to state control. Otherwise, the Hungarian parliament will not be able to effectively control the activities of the 4iG company and how it spends state funds. As the current opposition predicts, 4iG will always be able to invoke commercial and military secrecy to refuse to provide parliamentarians with the information they need.
In turn, 4iG management now expects that a loan agreement between the EU and the Hungarian government will be concluded in early 2026 as part of the activities of the new EU defense fund SAFE. Currently, it is known that the European Commission is theoretically ready to allocate a loan of €16 billion to Hungary from the SAFE defense fund for the development of the defense industry. No one knows today whether this will happen in reality. It is worth recalling that Budapest still expects to receive €18 billion from EU funds frozen by the European Commission due to problems with compliance with the principle of the rule of law in Hungary (and no progress is expected on this issue yet). In any case, even if the Hungarian government really receives a loan granted by Brussels for the development of the defense sector in the amount of €16 billion, these funds will be in the hands of a joint public-private company under the management of persons close to V. Orban.
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