VEEM Reloaded: WA Precision Caster Fires Up $14m Raise to Fuel Submarine-Sized Defence Ambitions

In a development that might make even seasoned naval brass sit up straighter, Perth-based VEEM Ltd (ASX: VEE) has lobbed a $14 million equity raise onto the ASX radar – and it’s no ordinary cap-in-hand moment. Instead, this is a calculated manoeuvre to cement VEEM's transformation from a marine engineering stalwart into a globally competitive defence manufacturer with sights firmly set on the US submarine supply chain.

And it’s a move that comes with some serious institutional and industry firepower.

Northrop, HII-NNS, and the Submarine Gold Rush

VEEM’s announcement is headlined by a 9-year Manufacturing Licence Agreement (MLA) with US defence juggernaut Northrop Grumman, allowing the West Aussie outfit to compete for a smorgasbord of pre-determined parts for the Virginia Class nuclear submarine program. Initial contract value? Up to US$33 million – though the real prize is long-term supply chain integration.

Hot on the heels of this is VEEM’s Level 1 supplier accreditation with Huntington Ingalls Industries’ Newport News Shipbuilding (HII-NNS), one of only two builders of nuclear submarines for the US Navy. The company has already received its first Request for Quote (RFQ) and expects a purchase order by the first half of FY26.

Why all the fuss? Because the US Navy is upping production of its Virginia Class boats from 1.2 per year to 2.0 by 2028, and potentially 2.33 thereafter. VEEM’s foundry capabilities—often lacking among Western suppliers—put it in pole position to meet swelling demand for precision castings.

“VEEM is uniquely placed to contribute to resolving the capacity shortage for defence-grade castings,” the company notes, with characteristic understatement.

A Capital Raise Anchored by Heavyweights

To bankroll this defence-fuelled trajectory, VEEM’s $14 million placement was pitched at $1.30 a share—a 13.6% discount to its last traded price of $1.505. While the markdown isn’t trivial, the placement was anchored by key supporters, including the founding Miocevich family (tipping in $1 million, pending shareholder nod) and Perennial Value Management, which ponied up $2.7 million for a 14.7% stake post-raise.

Post-raise, VEEM boasts a market cap just shy of $221 million and a very manageable pro forma net debt position of $0.6 million—effectively neutralised by the fresh equity injection.

Managing Director Mark Miocevich didn’t hold back: “These recent signed agreements with HII-NNS and Northrop Grumman... are a clear demonstration that we have now met the requirements of this huge market and are starting to reap the rewards.”

Singleton Joins the Crew

Adding ballast to the boardroom is David Singleton, former Austal CEO and defence sector veteran, who steps in as Non-Executive Director. Singleton’s CV reads like a naval procurement wish list: UK Ministry of Defence, BAE Systems, and a transformative stint at Austal, where he oversaw $2 billion in annual revenues and steered growth across four continents.

His appointment coincides with the retirement of long-time director Michael Bailey, marking a generational shift as VEEM leans deeper into defence and international markets.

What About the Core Business?

While defence is the shiny new armament, VEEM hasn’t abandoned its roots. Its propulsion and gyrostabiliser segments continue to deliver steady revenue, with global exports and tie-ins with firms like Princess Yachts and Volvo.

However, the company admits that its gyro segment has been slower to convert leads into orders, and the ramp-up in existing ASC submarine maintenance contracts is running slightly behind schedule. As a result, 1HFY26 EBITDA is expected to land modestly below the prior period. But the company is banking on a strong second half, aligned with the cyclical surge in defence contracts.

Outlook: All Ahead Full

By positioning itself at the confluence of surging defence budgets, AUKUS-driven capability uplift, and sovereign manufacturing ambitions, VEEM is not just making parts – it’s making a statement.

With a factory expansion underway, a $65 million contract with ASC already inked, and Hunter Class Frigate work potentially on the horizon, VEEM could soon find itself one of the most consequential non-prime contractors in the Australian defence landscape.

To borrow a nautical metaphor: VEEM has set its course, loaded the cannons, and now waits for the incoming orders to fire. Investors, analysts, and even naval strategists would do well to keep their periscopes trained on this evolving WA success story.