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Feb 17, 2021
Ariel Investments, America’s First Black-Owned Mutual Fund Giant, Launches Fund To Close The Racial Wealth Gap
John Rogers, chairman and chief executive officer of Ariel Investments. Christopher ... [+]
When Chicago-based investment firm Ariel Investments was founded by John W. Rogers Jr. in 1983, it was a breakthrough on Wall Street as the first black-owned mutual fund firm in the country. Over 38-years, Ariel has since navigated bull and bear markets and grown to manage $15 billion in assets, with Rogers deploying a value investing approach inspired by Benjamin Graham and Warren Buffett.
Rogers’ firm helped blaze a trail in the investment world, inspiring other Black investors like Eddie Brown of Brown Capital Management to launch their own wildly successful firms. Now, Ariel Investments is making a new push to increase inclusiveness in the world of business and finance.
On Wednesday, the firm launched a private fund business called Ariel Alternatives, with the backing of a $200 million commitment from JPMorgan, to invest and scale up sustainable minority-owned businesses. The endeavor is called Project Black, and will be led by Ariel co-CEO Mellody Hobson and Leslie A. Brun, the founder and former head of Hamilton Lane, a powerhouse alternative investment firm with $500 billion in assets.
According to a release announcing the fund, Project Black fund intends to invest in middle-market companies that are not currently minority owned, transforming these entities into certified minority business enterprises, and minority owned businesses. The fund aims to add value by connecting businesses with large companies, making diverse businesses a part of the supply chain of giant corporations in the S&P 500. It aims to “forge a new class of Black and Latinx entrepreneurs” and “close the racial wealth gap by generating jobs, economic growth and equality within underrepresented populations from the entry level to the boardroom.”
“Through Project Black, we plan to ultimately disperse opportunity throughout underrepresented communities. We want to change the narrative and foster true action and demonstrable change,” says Ariel’s Mellody Hobson, in the release. “While we have been encouraged and inspired by the supply chain diversity commitments recently made by large corporations, we believe that it is time to accelerate these promises with real, measurable steps,” adds Bruns.
The vehicle will invest in businesses with $100 million to $1 billion in revenue and pursue six-to-10 deal opportunities, initially. It will focus predominately on sectors like healthcare, industrial, media and marketing, outsourcing, manufacturing and packaging, technology, logistics, and financial services. The strategy relies on ongoing advise and a deep network of advisors and resources to help scale businesses and open doors.
In addition to Hobson, who was recently nominated as non-executive chairwoman at Starbucks, and Brun, Project Black has an advisory board comprised of business and financial leaders. The board includes Paget L. Alves, former chief sales officer of Sprint, James Bell the former CFO of Boeing, William M. Lewis, Jr. chairman of investment banking at Lazard, Robbie Robinson, a former partner at BDT Capital Partners, David J. Vitale, former vice chair of Bank One, and John W. Rogers Jr. Leading the investment team will be Ariel Alternatives senior managing directors Frantz Alphonse and Richard Powell, co-founders of APC Holdings, a private investment and corporate development firm.
The fund’s launch comes after a year in which the racial wealth gap became an increasingly prominent issue in business and finance, which spurred a groundswell of action.
In the wake of the police killing of George Floyd last spring, business leaders began to increase their commitments to supporting Black-owned businesses and startups and mega firms like Apple, JPMorgan and Bank of America BAC +0.7% committed billions of dollars to close the racial wealth gap. It also led to closer, frank examination of the gap in funding for businesses. Greenwood, the business community build in Tulsa, Oklahoma, and firebombed in a 1921 massacre, became a symbol of the forces of racism at the heart of the gap.
For Ariel’s founder John Rogers Jr., the national discussion came full circle. Rogers became one of the most vocal and well-connected business leaders to speak about the racial wealth gap. His own connections to Greenwood were vivid; Rogers is the great-grandson of J.B. Stradford, a trained lawyer who was one of the architects of Greenwood.
Stratford largely lost his fortune in the 1921 massacre and fled to Independence, Kansas fearing for his life. After settling down in Chicago, Stradford’s granddaughter was the first black woman to graduate law school and Rogers’ mother Jewel became the first black woman to argue a case before the Supreme Court.
After graduating Princeton University and spending a few years at Chicago investment firm William Blair, Rogers broke down his own barriers, founding Ariel as the first black-owned mutual fund firm. Now the firm aims to pass the baton onto a new generation of businesses.
