The White House selected Monroe Capital LLC (“Monroe”) to develop a first-of-its-kind investment strategy focused on supporting businesses operating in the U.S. automotive supply chain. Along with the anticipated advisory support of MEMA, The Vehicle Suppliers Association (“MEMA”) and the Alliance for Automotive Innovation, Monroe intends to launch this new strategy (the “Drive Forward Fund LP” or the “Fund”) to help address this key White House initiative. The Drive Forward Fund LP will seek to raise up to $1 billion and focus on investing in companies that play a pivotal role in fueling growth and innovation within the $1 trillion U.S. automotive industry.
Monroe will develop this White House inspired strategy to support small and medium-sized companies operating within the automotive value chain that are essential to the growth and modernization of the U.S. automotive industry. The Drive Forward Fund LP will target suppliers and manufacturers, as well as other adjacent businesses that provide complementary products and services to the industry. The mission of the Drive Forward Fund LP is to provide financial support to the businesses that supply mission 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. This entire ecosystem of businesses is critical to ensuring the U.S. position at the forefront of the global automotive market. In addition, Monroe believes the Drive Forward Fund LP 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 modernize the key automotive supply chains; including the clean vehicle supply chain, as well as support jobs in the automotive industry – more than 9.7 million 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 (“EVs”), 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 (“SDV”), autonomous driving systems, smart factories, and many other connected technologies. The Fund’s investments will intend to not only allow these businesses to capitalize 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 U.S. Small Business Administration (“SBA”) Small Business Investment Company (“SBIC”) license 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’s 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 (“OEMs”), 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. Monroe Capital is honored to play a leading role in this new strategy.”
Alex Parmacek, Portfolio Manager for the Fund at Monroe, added “Looking ahead, we believe the automotive industry is poised for transformative changes driven by advancements in electric vehicles (“EVs”), hydrogen fuel cell technology, and autonomous driving systems, among others. We believe a shift towards clean energy and sustainable vehicles can play a role in efforts to reduce carbon emissions and create a more durable supply base for the OEMs and Tier I suppliers. This Drive Forward Fund expects to play a pivotal role in supporting these technological innovations, to help ensure that the U.S. remains at the forefront of automotive technology and manufacturing.”
Bill Long, President and CEO of MEMA, stated, “MEMA is pleased to have a seat at the table in our ongoing c