DLA Piper advises MOD, PFR and PFR Ventures on investment in NATO Innovation Fund

The law firm DLA Piper has advised the Ministry of National Defence (#MOD), Polish Development Fund (#PFR) and PFR Ventures on their investment in the NATO Innovation Fund (#NIF).

PFR Ventures is PFR’s Group company specialising in investments in private equity and venture capital funds. PFR Ventures currently has nearly 70 funds in its portfolio.

The establishment of the NATO Innovation Fund was announced at a pre-summit session, at the NATO Summit in Vilnius, which took place on 11-12 July 2023.

The NATO Innovation Fund is an investment fund established by 23 NATO allies, which are its investors. NIF's goal is to make investments in advanced, new, and disruptive technologies with high dual-use potential (civilian and military). The fund’s investment strategy will include, for instance, artificial intelligence, quantum computing and biotechnology. The fund will have its offices in Amsterdam (main headquarters), London and Warsaw. The fund's formal registered office is in Luxembourg.

The fund will have about EUR1 billion to invest, while Poland's contribution will be close to 5% of this amount (EUR42 million / PLN190 million). On behalf of Poland, the investment in NIF was made by PFR through PFR Ventures, in consultation with the Prime Minister's Office and MOD.

The entirety of DLA Piper's work on the project involved two phases:

1. Advising MOD on determining the structure of investments in NIF: the first step was an analysis of the NIF accession structure commissioned by the Ministry of Defence under a contract concluded on the basis of the Act of 11 September 2019 - Public Procurement Law. The purpose of the work was to develop an optimal legal and tax structure through which Poland could join the NIF. As a result of this analysis, we recommended that the investment in NIF should be made through a specialised state-owned company with experience in transactions similar to joining NIF, that is, through PFR via PFR Ventures. Our recommendation was accepted by the MOD and forwarded to the Prime Minister's Office, the governing body that exercises corporate governance over PFR.
2. Advising PFR and PFR Ventures in connection with NIF: the second step was to assist PFR and PFR Ventures in negotiating, with the law firm Clifford Chance (London office) representing NATO, the final versions of the limited partnership agreement and the authorisation permitting the fund's general partner to enter into the limited partnership agreement on behalf of the NATO allies.

On the part of DLA Piper, legal advice was provided by an international team led by Łukasz Dynysiuk, partner. The team included lawyers from DLA Piper's Warsaw office: Wojciech Kalinowski and Michał Sowiński from Corporate/M&A team, Rafał Dostatni, from Tax team, and from Luxembourg: Caroline Pimpaud, Bahya Bouharati, Johanna Fournier from Corporate/M&A team, and Luis Muñoz and Cyril Poels from Tax team.

We would like to thank MOD, PFR and PFR Ventures for the trust they placed in our team during the project, as well as the law firm Clifford Chance (London office) for cooperation on this project.