The White House has selected Monroe Capital LLC to develop a first-of-its-kind investment strategy focused on supporting businesses operating in the US automotive supply chain.
Along with the advisory support of MEMA, The Vehicle Suppliers Association and the Alliance for Automotive Innovation, Monroe intends to launch this new strategy (the Drive Forward Fund LP ) to help address this key White House initiative.
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The fund will seek to raise up to US$1bn and focus on investing in companies that play a pivotal role in fueling growth and innovation within the $1 trillion US automotive industry.
Monroe will develop this strategy to support small and medium-sized companies operating within the automotive value chain that are essential to the growth and modernisation of the U.S. automotive industry. The fund will target suppliers and manufacturers, as well as other adjacent businesses that provide complementary products and services to the industry.
The mission is to provide financial support to the businesses that supply critical parts such as powertrain, body, drivetrain, chassis, interiors, and electrical components, as well as complementary Software-as-a-Service (“SaaS”) and other auto technology and business service providers that cater to the industry.
The fund will also evaluate growth opportunities to invest in innovative companies in battery component and subcomponent manufacturing and materials recycling.
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By GlobalDataThis entire ecosystem of businesses is critical to ensuring the US position at the forefront of the global automotive market. In addition, Monroe believes the fund will benefit the American automotive industry, which should have a positive impact on workers as well as state and local economies with jobs in the areas where these target companies are located.
Building on the announcement vice president Harris issued in Detroit in May supporting growth and jobs in the automotive industry, Monroe will seek to provide capital solutions to help manufacturers, suppliers, and service providers modernise the key automotive supply chains; including the clean vehicle supply chain, as well as support jobs in the automotive industry – 9.7m across the country. As part of its strategy, the fund also intends to provide companies access to funding for technology investments, including but not limited to investments in the transition from internal combustion production to electric vehicles as well as the software offerings that will drive the industry’s shift from a purely transaction sales model to a complete vehicle lifecycle.
Major technological enhancements transforming the industry include Software-Defined Vehicles, autonomous driving systems, smart factories, and many other connected technologies. The fund’s investments will intend to not only allow these businesses to capitalise on the industry’s compelling growth tailwinds, but also to navigate supply chain challenges and the rapidly evolving operating landscape.
Monroe intends to pair private investor capital with leverage, including low cost government-guaranteed leverage that Monroe hopes to obtain through applying for a US Small Business Administration (SBA) Small Business Investment Company licence for the fund.
“We believe this new Drive Forward Fund will be critical to catalyzing growth and innovation within America’s automotive supply chain,” said Monroe chairman and CEO, Ted Koenig. “The fund will have an opportunity to provide essential financial support to small and medium-sized businesses and will help provide a consistent and reliable supply chain to the Original Equipment Manufacturers, Tier 1 auto manufacturers, and other auto industry stakeholders. In addition, the fund will strive to provide support to auto industry suppliers as they become more competitive and remain local community anchors as they grow their businesses to support key initiatives within the overall automotive industry.”
The Drive Forward Fund plans to be advised by a council of experts from across the automotive industry to help ensure capital is directed to small and medium-sized auto suppliers, manufacturers, and service providers with ties to significant domestic manufacturing content.
Monroe anticipates the advisory council will include representatives from MEMA and Alliance for Automotive Innovation, with support from the OEMs, consultants and business organisations who recognize the importance of providing adequate liquidity and stability for the auto supply chain and critical suppliers.
The fund intends to begin fundraising after progressing through the SBA licensing process.
