1. INTRODUCTION

In today’s evolving security, technological and economic environment, the Republic of Slovenia is facing an increasing need to develop and maintain capabilities in areas critical to national security, the resilience of supply chains, and the long-term economic robustness of the state. Geopolitical shifts, disruptions in global supply chains, and accelerated technological development further underscore the importance of self-sufficiency, resilience and strategic autonomy.

These challenges are also reflected in the key strategic documents of the Republic of Slovenia, in particular the Resolution on the National Security Strategy of the Republic of Slovenia, the Resolution on the General Long-Term Programme for the Development and Equipping of the Slovenian Armed Forces until 2040, and the Defence Industry and Technological Base Development Strategy of the Republic of Slovenia. These documents emphasise the importance of strengthening the domestic industrial and technological base and enhancing the resilience of supply chains. The Defence Industry and Technological Base Development Strategy of the Republic of Slovenia also provides for the establishment of a dedicated investment instrument to support companies and projects in the defence sector, as well as to strengthen national security and resilience.

Within this framework, DOVOS was established as a specialised investment company of the Republic of Slovenia, mandated to invest in the development of industrial, technological and manufacturing capacities of strategic importance. The Republic of Slovenia established the company as its sole shareholder, positioning it as a key platform for development and investment in the fields of defence, security and resilience.

The establishment of such an investment vehicle is primarily justified by the nature of projects in the defence, security and technology sectors, where the development of new capabilities typically requires long-term, capital-intensive investment. An active role of the state as an equity investor is therefore essential for the development of critical capabilities, the reduction of strategic dependencies, and the strengthening of supply chain resilience.

DOVOS operates as a specialised investment company whose core function is to provide equity financing to strategic industrial projects and companies, particularly where long-term investment is required for the development or expansion of industrial, technological and service capabilities. The company’s investment activities are focused on projects, enterprises and industrial initiatives that contribute to the development of key capabilities of the Republic of Slovenia, while also demonstrating sound development prospects and market potential. While the company aligns its investment decisions with the strategic priorities of the Republic of Slovenia, each investment must demonstrate economic viability.

The company’s investment rationale is based on two interrelated pillars:

  • a strategic dimension, derived from national priorities and the need to strengthen key state capabilities; and
  • an economic dimension, ensuring financial viability and long-term market returns of individual investments.

In this way, DOVOS combines the state’s strategic development objectives with the principles of responsible and economically grounded investment. It serves as a dedicated investment vehicle for the systematic strengthening of the Republic of Slovenia’s industrial, technological and manufacturing capacities, contributing to greater self-sufficiency, resilience and strategic autonomy.

2. INVESTMENT STRATEGY OF DOVOS

DOVOS is a company wholly owned by the Republic of Slovenia. All decisions are taken independently, with responsibility borne by the company’s management and supervisory board. In accordance with the Articles of Associations of DOVOS, the founder is informed of certain transactions and may exercise a veto in relation to them.

The company will, as a rule, source investment opportunities through public calls for proposals for equity partnership, conducted periodically depending on the availability of funds.

Target Market

The primary target market of DOVOS is the Republic of Slovenia. The company’s investment activities are primarily focused on companies that have their registered office in the Republic of Slovenia and carry out significant business activities there.

Such geographical focus enables more efficient execution of investments, closer monitoring of operations and active portfolio management. At the same time, it reduces operational, legal and execution risks and enables more effective oversight of investments.

The definition of the target market does not limit the international orientation of the companies in which DOVOS invests. On the contrary, the company supports the development of enterprises with strong potential to operate in international markets.

DOVOS may, on an exceptional basis, also invest in companies or projects outside the Republic of Slovenia, where such investments directly contribute to the development of the Republic of Slovenia’s strategic capabilities or to strengthening Slovenian industrial and technological value chains.

Such investments may, in particular, relate to the establishment of strategic partnerships, joint ventures, access to key technologies or the integration of Slovenian companies into international industrial and supply chains.

Target Areas

The target investment areas are derived from the strategic priorities of the Republic of Slovenia in the fields of defence, security and resilience. These priorities are based on relevant national strategic documents and current policy directions of competent authorities and government advisory bodies, including the Strategic Council for Defence Technology, the Industrial Base, and Resilience. DOVOS translates these strategic priorities into an investment framework within which it identifies projects and companies with appropriate technological, industrial and market potential.

The target investment areas define the technological, industrial and service segments in which DOVOS will, as a rule, seek investment opportunities. Their purpose is to direct investment activities towards areas with appropriate development and market potential, as well as the capacity to increase the production and technological capabilities of target companies.

The defined areas serve as a framework for the preparation of individual public calls for proposals for equity partnership with DOVOS, in which a narrower or more selective set of areas may be specified, depending on development priorities or market conditions.

DOVOS’s investment areas are generally defined within the following categories:

  • A1 – Dual-use capabilities and resilience;
  • A2 – Unmanned systems and counter-UAS capabilities;
  • A3 – Mobility and multi-purpose logistical support;
  • A4 – Cybersecurity, artificial intelligence and digital technologies;
  • A5 – Addressing critical capability gaps;
  • A6 – Air and missile defence and sensor capabilities;
  • A7 – Space and satellite communications.

In each individual public call for equity partnership, DOVOS defines the specific target investment areas and, where appropriate, their sub-areas.

Investment areas may also include other related technological or industrial fields, where these are consistent with the company’s sectoral orientation and meet the economic criteria of the investment strategy.

In constructing its investment portfolio, DOVOS follows the principle of diversification, with a view to limiting risk concentration and ensuring an appropriate risk-return profile.

Target Ownership Stakes

DOVOS generally invests in minority equity stakes, typically exceeding 25% and up to 50% of share capital or voting rights.

Such a stake provides an appropriate level of influence over key strategic decisions of the company, while enabling effective protection of the investment, alongside the continued entrepreneurial initiative and operational responsibility of existing shareholders or management.

DOVOS may, on an exceptional basis, also invest in a lower minority stake, provided that an appropriate set of corporate rights is ensured, enabling the protection of the investor’s economic interests and oversight of key decisions.

As a minority investor, DOVOS will, as a rule, seek governance and economic rights aligned with market standards for comparable transactions. The scope of such rights is determined in light of the transaction structure, the company’s stage of development and the level of risk assumed, and is further specified in Annex 1.

DOVOS does not pursue an acquisition-driven strategy or the systematic acquisition of majority stakes.

Investment Size

The size of individual investments is aligned with the available funds and is defined in each individual public call.

The lower investment threshold reflects the requirement for sufficient materiality of the investment from the perspective of governance and expected returns, while the upper threshold allows for appropriate portfolio diversification and the limitation of concentration risk.

Investment Approach

DOVOS undertakes investments exclusively in the form of equity contributions, either in existing companies or in newly established joint ventures.

Investments are carried out through capital increases, contributions upon the establishment of a new company, the acquisition of equity stakes, or a combination of capital increase and share acquisition. Contributions are made in cash and are valued at market value on the basis of an appropriate independent assessment.

Depending on the nature of the project and the level of risk, DOVOS may structure investments in phases (tranches), linked to the achievement of predefined business or development milestones.

DOVOS does not provide debt financing, subsidies or other forms of non-market support. All transactions are structured under conditions that would be acceptable to a prudent private investor operating in a market economy.

The structure of each transaction is determined in light of the company’s stage of development, capital structure, assessed risk and expected return on investment.

DOVOS does not assume any obligation to provide additional financing beyond the agreed investment structure, unless justified on the basis of economic assessment and under market conditions.

Legal Form of Target Companies

DOVOS intends, as a rule, to undertake minority (equity) investments in companies engaged, or to be engaged, in profit-generating activities within the target areas. To ensure appropriate governance and economic rights as an investor, DOVOS intends to invest in companies organised, or to be organised prior to the investment, as limited liability companies.

Where a company is structured as a joint-stock company (d. d.) or another legal form, DOVOS will undertake an investment only following prior corporate restructuring.

Investment Targets

DOVOS invests in companies with their registered office in the Republic of Slovenia. Investments may be made in individual companies or in consortia, in which case a lead company must be designated to assume responsibility for project coordination. The lead company (consortium partner) must be a company, while other partners may, in addition to companies, include other private-law entities, research organisations and other institutions. For the purposes of structuring an investment, a special purpose vehicle (SPV) may be established in the Republic of Slovenia, including in the form of a joint venture, where such a structure supports effective risk management and enhances transparency.

The companies in which DOVOS invests, and their shareholders, are expected to ensure compliance with applicable requirements and adherence to the principles set out in Annex 2.

  • Development and Operational Maturity

    In the core technological area, a minimum technological maturity level of TRL ≥ 7 must be demonstrated for a complete solution (rather than individual components), together with credible evidence of validation or demonstration in a relevant or operational environment (e.g. test reports, certificates, references or demonstration reports). This must be accompanied by a realistic and feasible plan for industrialisation or scale-up, including the envisaged timeline, required investment and key development or production milestones.

    Where serial production has not yet been established, it is expected to be achieved within a reasonable timeframe, as a rule within 36 months of completion of the transaction, unless otherwise specified in an individual call.

    The Technology Readiness Level (TRL) is defined in accordance with the Scientific Research and Innovation Activity Act (ZZrID). A more detailed description of the TRL scale is provided in Annex 3.

  • Market Focus

    The primary objective is to pursue the strategic priorities of the Republic of Slovenia in the fields of defence, security and resilience, while strengthening the potential for participation in international markets. The business model must demonstrate market validation and the potential for sustainable revenue growth.

Objectives and Principles of the Investment Strategy

In carrying out its investment activities, DOVOS operates in accordance with the Market Economy Investor Principle.

The process preceding an investment decision is conducted as an investment process rather than a public procurement procedure. In this context, DOVOS adheres to the principles of transparency in documentation and integrity. In implementing and managing its investments, DOVOS acts in accordance with the principles of due care and responsibility, independence, transparency and efficiency. In its operations, the company observes and applies the applicable Corporate Governance Code for State-Owned Enterprises, the Recommendations and Expectations of Slovenian Sovereign Holding, and other corporate governance instruments issued by the state asset manager and applicable to companies on a “comply or explain” basis.

The primary objective of DOVOS’s investment strategy is to contribute to the strategic priorities of the Republic of Slovenia through investments in the target areas, while ensuring economic viability and risk-adjusted market returns. In its operations and investment activities, DOVOS also addresses compliance risks, including those arising under competition law, in particular state aid rules. Compliance of individual investments with state aid rules is primarily ensured through the consistent application of the Market Economy Investor Principle (MEIP – Market Economy Investor Principle / PIT – Private Investor Test).

Through its equity investments in target companies, DOVOS supports the development of production, service and operational capacities, strengthens technological capabilities, and improves companies’ competitive position, with a view to enhancing the long-term value of its investments.

The primary source of return is expected to be value appreciation (capital gains), supplemented by dividend income, where such distributions do not compromise the long-term growth of the company.

The timing of any exit from an investment is assessed on a case-by-case basis, taking into account the development of the company and market conditions, and is not, as a rule, predetermined. DOVOS reserves the right to exit an investment also in cases where the defined development or business objectives are not achieved.

As a rule, DOVOS pursues a long-term investment horizon, enabling the development and growth of target companies and enhancing their value. DOVOS does not pursue objectives that would be inconsistent with the principles of economic viability, responsible capital management and long-term value creation.

Investment Selection Criteria

In line with the objectives set out in the preceding section, the primary investment criterion is alignment with the strategic priorities of the Republic of Slovenia in the fields of defence, security and resilience, as well as contribution to the development of the defence industry and technological base.

At the same time, each investment is expected to demonstrate economic viability and generate market-based returns commensurate with the risks associated with achieving the projected returns. The assessment of economic viability is carried out in accordance with the Market Economy Investor Principle (MEIP), also referred to as the Private Investor Test (PIT).

Conditions for the Assessment of Proposals

The conditions for the assessment of proposals will be set out in each public call for equity partnership with DOVOS.

Annex 1

1. Key Terms of DOVOS’s Equity Investments: Expected Rights and Limitations

The governance and economic rights of DOVOS and the investors, together with the related obligations, will be set out in the relevant transaction documentation (e.g. term sheet, equity investment agreement), which will form the basis for each investment.

Upon completion of an equity investment, these rights and obligations will be reflected in the constitutive act of the company in which DOVOS invests, or in a shareholders’ agreement governing the exercise of shareholders’ rights and obligations.

The following provides an indicative list of the minimum expected governance and economic rights of DOVOS in relation to an equity investment. The list is not exhaustive and will be tailored for each investment, taking into account the specific circumstances.

2. Governance Rights

The scope of DOVOS’s expected governance rights varies depending on their intended purpose. For clarity, the rights set out below are grouped into two subcategories: (i) governance rights and (ii) transfer rights.

i) Governance Rights

  • Requirement for DOVOS’s prior consent in respect of certain matters which, by their nature (e.g. transactions with related parties, granting of loans and guarantees, investments in other companies, transactions with counterparties from high-risk or sanctioned jurisdictions, adoption of the annual business plan, transfers of key assets or a substantial portion of the company’s assets, etc.) or value, are considered to involve increased risk or to be of particular significance to DOVOS;
  • Requirement for DOVOS’s prior consent in respect of certain corporate matters, such as corporate reorganisations, increases or reductions of share capital, dissolution of the company, etc.;
  • Establishment of a supervisory board, with DOVOS having the right to appoint a number of members such that its proportion of appointed members is at least equal to its shareholding;
  • The right of DOVOS to nominate a member of the management board or a director responsible for finance;
  • Consultation rights of DOVOS in respect of strategic decisions of management (whether in its capacity as a shareholder or through the supervisory board), as well as enhanced access to business documentation and information beyond the statutory minimum (e.g. an obligation on management to submit quarterly reports on key performance indicators and other matters as may be required by DOVOS, and reports on material adverse events affecting the company, etc.);
  • Other rights or arrangements which, by their nature, constitute an equivalent or complement to the rights set out above and address substantively similar matters.

ii) Transfer Rights

  • Requirement for DOVOS’s prior consent as a minority shareholder in respect of transfers of ownership interests to third parties (i.e. persons who do not already hold shareholder status), as well as transfers without consideration between existing shareholders;
  • Establishment of a pre-emption right in favour of DOVOS over the ownership interests held by other shareholders;
  • Establishment of a tag-along right for DOVOS as a minority shareholder in the event of a transfer of ownership interests by another shareholder, while DOVOS will not be subject to any obligation to participate in a joint sale (drag-along);
  • Establishment of a contractual undertaking by existing shareholders not to transfer their ownership interests in the company for a specified period following DOVOS’s investment;
  • Definition of procedures and conditions governing the exit or exclusion of shareholders (e.g. where DOVOS’s investment partner fails to notify changes to its ownership structure or beneficial ownership, including where such ownership involves persons from jurisdictions subject to EU sanctions).

Annex 2

REQUIREMENTS FOR COMPLIANCE, INTEGRITY AND THE “NO SIDE BENEFITS” PRINCIPLE

Companies within the DOVOS portfolio are expected to uphold the principles of transparency, independence and effective management of conflicts of interest, thereby ensuring ethical, fair and reliable conduct of the company, its stakeholders and all individuals involved in its operations.

The principle of transparency entails that decisions, processes and activities of the organisation or its representatives are clear, understandable and accessible to relevant stakeholders.

The principle of independence entails that decision-makers are free from external influence or pressure that could compromise their impartiality and objectivity.

The management of conflicts of interest entails that situations in which personal, financial or other interests may affect impartial decision-making are properly identified, disclosed and managed, thereby safeguarding the integrity of decisions.

Where, in connection with an investment, any person acting in the name or on behalf of one contracting party promises, offers or gives any undue benefit to a representative or agent of the other party for the purpose of:

  • securing the investment;
  • concluding a transaction on more favourable terms;
  • failing to exercise due oversight of the performance of contractual obligations; or
  • any other act or omission that causes harm to the other contracting party or enables an undue benefit for a representative, agent or intermediary of that party, the investment agreement, or any such provision, shall be null and void, and any related ancillary transactions shall be voidable.

DOVOS will not approve any side arrangements or contractual structures that selectively grant economic advantage to bidders under non-market conditions. Any related transactions (including leases, services, supplies or testing arrangements) must be concluded on market terms or through appropriate open procedures.

Annex 3

TECHNOLOGY READINESS LEVEL (TRL )

Technology Readiness Level (TRL) refers to the level of technological maturity of a technology or solution, as defined in the Scientific Research and Innovation Activity Act (ZZrID). The TRL scale comprises nine sequential stages of technological development, ranging from basic research to validated use in an operational environment.

  • TRL 1 – Basic principles observed
  • TRL 2 – Technology concept formulated
  • TRL 3 – Experimental proof of concept
  • TRL 4 – Technology validated in a laboratory environment
  • TRL 5 – Technology validated in a relevant environment
  • TRL 6 – Technology demonstrated in a relevant environment
  • TRL 7 – System prototype demonstrated in an operational environment
  • TRL 8 – System complete and qualified
  • TRL 9 – System proven in an operational environment or in commercial use