U.S. Navy Taps Opportunity Zone Fund To Expand Submarine Building Capacity

The U.S. Navy has announced that private equity-backed United Submarine Alliance Qualified Opportunity Fund will provide capital for the redevelopment of a major submarine supplier yard in an Opportunity Zone in Mobile, Alabama.

The “USA Fund,” launched earlier this month by CapZone Impact Investments, acquired Alabama Shipyard on Friday. The 355-acre site will be redeveloped into a modernized shipyard that will build the Navy’s Columbia- and Virginia-class nuclear submarines.

The new facility, located in an Opportunity Zone on Pinto Island, will be renamed Mobile Naval Yard, and could create up to 3,000 new jobs.

Mobile Naval Yard is located in an Opportunity Zone on Pinto Island on the Mobile River.

“Today’s announcement underscores our commitment to finding innovative and creative solutions to accelerate submarine production and is emblematic of my Maritime Statecraft initiative that seeks to incentivize expansion of our national shipbuilding capacity by engaging new, forward-leaning stakeholders and leveraging the power of public and private investment,” said Secretary of the Navy Carlos Del Toro.

The acquisition of Alabama Shipyard and surrounding land on Pinto Island was partly funded by a $152 million Navy contract awarded to Austal USA, a limited partner in USA Fund. The contract aims to support the U.S. Navy’s goal of annually delivering one Columbia-class and two Virginia-class submarines.

According to a statement released by CapZone Impact Investments, the USA Fund will serve as a platform between the U.S. Navy, investors, suppliers, contractors and local leaders to harness the power of the American economic engine for the benefit of our country’s defense readiness.

“This Navy initiative is a model for how public-private partnerships can address critical infrastructure needs in the defense and national security sectors,” said CapZone Impact Investments CEO Al Puchala. “We developed this platform to activate institutional and private American capital to support government priorities.”

This public-private investment comes at a critical time, as the U.S. Navy manufacturing base has shrunk to just one-third of its capacity from 30 years ago. According to the Navy, submarine production must nearly double, requiring an additional 3.5 to 4.5 million submarine module production and outfitting hours annually. The partnership with the USA Opportunity Zone Fund will help ensure submarine shipbuilders can meet the Navy’s production goals.