Bain Capital and KPS Capital Partners are exploring potential bids for Iveco Group’s defence division, as the Italian truckmaker considers strategic options for the business amid growing demand for European defence assets.

The defence arm—known as Iveco Defence Vehicles (IDV)—could fetch up to €1.5bn, with discussions around a possible spinoff or outright sale already underway. Shares in Iveco rose as much as 4.8% following reports of private equity interest.

Bain Capital and KPS are no strangers to the sector. Bain led the €1.7bn acquisition of Spanish jet engine maker ITP Aero from Rolls-Royce in 2021, while KPS owns AM General, manufacturer of the Humvee military vehicle.

Iveco’s defence division produces armoured and tactical vehicles and has expanded into artificial intelligence and software applications for military use. The unit has drawn increased attention from investors as European governments raise defence budgets following geopolitical instability and US threats to scale back security commitments.

Despite strong private equity interest, Italian defence group Leonardo SpA remains the most likely buyer due to its close ties with the government—its largest shareholder—and ongoing collaborations with Iveco. Leonardo is reportedly considering a joint bid with Rheinmetall AG, although past talks have failed to reach agreement on price.

Other potential suitors include KNDS NV and Czechoslovak Group, while Indra Sistemas has opted not to pursue a bid for now. Iveco may also explore an IPO if it does not receive offers that meet its valuation expectations.

No final decision has been made, and the company is expected to update the market following regulatory and internal approvals.

Source: The Edge