Ariel Investments, one of the largest Black-owned asset management companies in the U.S., recently announced the closing of Project Black, LP, its first private equity initiative.
The fund seeks to invest in middle-market companies with revenue between $100 million and $1 billion, with a focus on transforming these companies into certified minority business enterprises of scale.
Project Black will leverage $1.45 billion in commitments from its limited partners and co-investors, who come from various sectors including consumer retail, energy and infrastructure, financial services, healthcare, sovereign and private wealth, and technology. In addition, JPMorgan Chase & Co. intends to co-invest up to $200 million alongside the Fund in future deals.
The Fund’s investment strategy is to pursue 6-10 middle-market platform companies, focusing predominantly on high-margin sectors that fulfill corporate procurement needs, including healthcare, industrial, media and marketing, outsourcing, manufacturing and packaging, technology, transportation and logistics, and financial and professional services.
Post-acquisition, the Fund’s investment team is expected to partner with its companies to pursue both organic and non-organic growth strategies, with the aim of creating a new class of Black and brown entrepreneurs. The Fund also employs a formal environmental, social and governance (ESG) and social impact policy to ensure its portfolio companies have the potential to create career paths and economic growth for underrepresented minorities.
One example of the Fund’s successful investment portfolio is the acquisition of Sorenson, a leading U.S. communications provider for people who are Deaf and hard of hearing, at an enterprise value of $1.3 billion in April 2022. Prior to acquisition, just 3% of Sorenson’s senior leadership team and board of directors were comprised of minorities.
However, with Ariel’s control and active efforts to augment the organization with best-in-class leaders, minority representation has significantly increased to 43% of the senior leadership team and board.
The Fund’s goal is to help close the racial wealth gap by creating minority-owned businesses of scale through access to both capital and customers. Ariel Alternatives aims to forge partnerships between its network of the world’s largest corporations and its portfolio companies and to scale sustainable minority-owned businesses to serve as leading vendors to Fortune 500 companies.
Over the next decade, Project Black seeks to create 100,000 new jobs in underrepresented minority communities across up to 10 portfolio companies and to generate jobs and economic growth within these communities.
The McKinsey Institute for Black Economic Mobility’s research and insights helped inform the Project Black strategy, which is also supported by a number of legal advisors including Kirkland & Ellis LLP and Willkie Farr & Gallagher LLP, and Greenberg Traurig, LLP.
Ariel Investments, LLC, the parent company of Ariel Alternatives, is a global value-based asset management firm founded four decades ago in 1983. With assets under management totaling approximately $16.2 billion as of December 31, 2022, Ariel serves individual and institutional investors through five distinct strategies, including Ariel Focus Fund, Ariel Discovery Fund, Ariel Fund, Ariel Appreciation Fund, and Ariel International Fund.
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(i20x.com)