A Rising Tide

Explosive growth in the securities business gives African American investment banks a boost

it’s constantly an uphill battle to participate in good deals,” says Morgan Bassey, president and CEO of Harvestons Securities Inc. (No. 14 on the B.E. Investment bank list) in Denver. The firm recently co-managed close to $75 million in bond offerings for the Denver Convention Center.

For small and large players alike, a greater challenge is trying to break into the ranks of sole or lead managers on major transactions. It’s one thing to co-manage a deal or be part of an underwriting syndicate where an investment bank helps sell a bond issue to individuals or institutions but it takes far more expertise and is much more lucrative for a bank to serve as lead manager or “book-runner.” In such a case the firm does everything from due diligence and advisory work to pricing and structuring a bond issue and selling the majority of the securities to be marketed.

BLAZING A TRAIL IN CORPORATE BONDS
In 1999, only two corporate bond transactions were lead-managed by an African American investment bank. In both deals, New York-based Utendahl Capital Partners L.P. (No. 3 on the B.E. Investment bank list) was given the nod. In September, Utendahl sole lead-managed a 10-year, $300 million bond deal by Coca-Cola Enterprises Inc. The firm also acted as a joint book-running lead manager in a $450 million fixed-income offering from AT&T. Moreover, as an equity underwriter, Utendahl had a role as co-manager of Pepsi Bottling Co.’s $2.3 billion initial public offering last March.

“While our underwriting efforts have always been strong, 1999 was a landmark year for us in the capital markets arena,” says John Utendahl, chairman and CEO of Utendahl Capital Partners. “We were the first minority firm to lead-manage over $1 billion of corporate debt transactions.”

To add more luster to its reputation, Utendahl in 1999 purchased a $1.8 billion asset management division of Atlantic Portfolio Analytics & Management Inc. This now makes Utendahl Capital Management the largest African American-owned fixed-income and convertibles manager in the U.S. with $3.2 billion in assets. As a result of the acquisition, Utendahl opened an office in Orlando adding to its offices in New York and San Diego.

Also last year, the firm launched Urban America L.P., a private real estate fund dedicated to making commercial real estate investments in America’s inner city. The fund, which lured such investors as Time Warner President Dick Parsons and American Express President Ken Chenault, recently closed on $100 million of properties.

Aside from Utendahl Capital, Blaylock & Partners L.P. (No. 1 on the B.E. Investment bank list) and the Williams Capital Group (No. 4 on the B.E. Investment bank list) are considered the “Big Three” among New York-based African American-owned investment banks. In 1999, Williams Capital lead-managed $1.7 billion in transactions. Notably, the firm also co-managed AT&T Corp.’s historic $4.5 million bond issue and served as the only minority co-manager on a $5.7 billion Wal-Mart deal.

For its part, Blaylock & Partners L.P. senior-managed $8.59 billion in offerings last year including serving as co-lead on the $8 billion bond

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