JF Lehman & Co and Thomas Weisel Capital Partners, the US private equity firms, have invested £85m (€138m) in the buy-out of Racal Instruments, a subsidiary of Thales, the France-based electronics company targeting the aerospace, defence and information technology sectors.

Racal Instruments supplies test systems for radio communications, broadband, and commercial and military electronics markets. Investing in a military electronics supplier may be particularly attractive to financial buyers right now, not only because of the US-led war on terrorism, but also because the defence sector has counter-cyclical elements in an economic downturn. The sector relies on government contracts, which are budgeted for long in advance, so a buyer would be aware of orders in the pipeline.